| Trying to get business financing for a transportation | | | | bridge the gap - their businesses fail. There is an |
| company in the current economic environment has | | | | alternative though - it's called factoring. |
| been nearly impossible. This applies to both trucking | | | | Factoring your freight bills bridges this gap in a simple |
| companies and freight brokers. Most institutions are | | | | and elegant way. It provides you with an advance on |
| imposing a number of restrictions on their financing | | | | your freight bills, which you can use to cover your |
| activities to the point where getting a business loan is | | | | expenses. The transaction is then settled when your |
| very difficult. It's not that institutions don't want to | | | | client pays the freight bill. |
| make business loans - but rather - they have to be | | | | Freight factoring has a number of advantages and is |
| extra careful. For example, many institutions now | | | | easy to qualify for. Most factoring companies look at |
| require company financial statements for multiple | | | | the credit of your client as the most important |
| years that must show profits. They need substantial | | | | requirement (though not the only one) to provide |
| assets as collateral, and usually require the business | | | | financing. Although your client's credit is important, |
| owner to have substantial assets themselves. | | | | your company should be free of liens, judgments and |
| But, what happens if you can't meet this criteria? Are | | | | tax problems. |
| you basically out of luck? Not really. You just need to | | | | Freight bill factoring is an ideal source of financing for |
| look elsewhere. | | | | startup and growing transportation companies, it |
| Let's look at a common problem in the transportation | | | | provides financing to cover operational expenses |
| industry - cash flow. This affects brokers and carriers | | | | while you focus on growing your business. One if the |
| alike. They have expenses that they must cover | | | | biggest advantages of freight factoring is that is tied |
| immediately, such as drivers and repairs. However, | | | | to your sales - your financing line grows as your |
| they must also wait up to 60 days to get paid by | | | | business grows. |
| their clients. If they don't have a cushion of capital to | | | | |