| The current economic environment has been | | | | environment. Most institutions will only make a |
| particularly tough for trucking companies and freight | | | | business loan to a company that has a solid |
| brokers. Winning client accounts is harder than ever. | | | | multi-year growth record, outstanding financials, |
| Likewise, keeping clients requires work very hard to | | | | substantial assets and a well seasoned management |
| meet their ever changing demands. To complicate | | | | team. Few transportation companies can meet all |
| matters, few clients pay their invoices quickly. Most | | | | these criteria. |
| commercial clients take anywhere from 30 to 60 | | | | There is a better way to solve the problem by using |
| days to pay their freight bills. This puts a considerable | | | | a solution that provides the equivalent of a quick |
| stress on your cash flow since you still need to pay | | | | payment. It's called freight bill factoring. It works by |
| for drivers, fuel and repairs. Few companies can | | | | using a financial intermediary called a factoring |
| actually afford to wait and tend to run into working | | | | company, who advances funds against your freight |
| capital problems. | | | | bills. They settle the transaction once your client |
| There are two common ways to deal with this cash | | | | actually pays the bill. One advantage of factoring is |
| flow problem. The simple solution is to ask clients for | | | | that it provides the equivalent of a quick payment, |
| a quick pay. Unfortunately, the simple solution is not | | | | without requiring your clients to pay faster. This |
| easy at all. Clients have the upper hand and will | | | | makes it easy to integrate in most organizations. |
| usually demand to 30 day terms or threaten to take | | | | Freight factoring is easier to get than other forms of |
| their business elsewhere. The second solution | | | | financing. To qualify for this type of financing, your |
| involves using business financing to close the gap in | | | | business must have solid commercial clients, be free |
| the cash flow. The problem with this strategy is that | | | | of lawsuits and encumbrances and have good growth |
| business loans are not easy to obtain in this | | | | and stability potential. |