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 Our Trucking Factoring Companies Provide Fast Cash

 

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Compared to a bank loan, a trucking factoring arrangement is a  personalized agreement which takes into account the  unique  requirements of your company.  This is  extremely different from the  traditional banking  documentation  utilized to  acquire a loan,  and that is a cookie-cutter  arrangement  according to the bank's  requisites.

 On top of that,  a lot of  trucking factoring companies do not have maximum limits.  When you have  pretty good, creditworthy clients and there are  zero legal  barriers (like liens, lawsuits or judgments),  invoice factoring companies will fund all the  receivables you can  bring in. This stands out greatly with a  normal bank  circumstance, where  each loan is capped .

A  brand-new client  receives  first approval in  under 24 hours, and funding in seven to ten days. By contrast, a loan application to a bank can take  up to 30 to 60 days to  go through through to the loan review committee, with  financing to follow in yet another 30 to 45 days.

 Alongside quick  resolution time,  receivable factoring does not  restrict  each of your  firm's assets (just the receivables) or  acquire debt. Business ownership is not  impacted, keeping your trucking firm as liquid as possible, while  strengthening your balance sheet and overall financial position.  On the other hand, banks will, in most cases, not only file a lien against (or hold as collateral)  every one of your business assets, but also against your personal property ( consisting of your house, your  land, and your lawn mower ).

With  a factoring company, no  added debt is  accumulated and the credit rating of your  company  stays  secured.  Typically a  factoring company arrangement can  really  improve a  firm's chances of restructuring long-term debt.  Considering that  receivable financing offers an infusion of  funds, the  firm can pay its bills  in time and clear up other  remaining credit obligations.  Essentially, this  cash in hand may  enable a  firm to "get its act together" in a way that  entices banks and other financing entities to look more  positively on  quite possibly reorganizing debt or  funding new property or construction. It's not  out of the ordinary for a good client to " move onto" to bank  finance after a  period of time of "financial adjustment" while  invoice factoring.

While the  benefits of  invoice discounting over borrowing money are considerable, most  companies do not have the luxury of  time to compare both methods of  funding. Banks, with their regulatory controls and inherent inflexibility, do not make it easy for  the majority of  trucking companies to  meet them for  funding.  Invoice factoring(feight factoring), on the other hand, is the  acquisition of an asset and, because of this, is not regulated by state of federal agencies.

 Our company  commonly hear freight company owners  whine about their banks, and the  view is  often the same: the only people who can  get a loan are those who don't  need to have one!

The  Initial Rules of the Costs of Factoring

It costs money. It costs more than bank money. Does it cost  much more than investor money? Depends upon  the amount of equity you relinquish to your investor, and  many will  need the lion's  stake. But let's stick with the costs of factoring.

 

 

The Second Rule of the Costs of Factoring

It must be viewed as a transactional cost rather than interest charged for a  time frame, for a  several reasons

 Initially, factors must charge more for the money we advance because the length of time the money is outstanding is so short, usually 30 to 45 days. To charge bank rates on transactions of this short  period benefits only the client; the  freight factoring company  earns no money, and  actually, would lose his shirt.

In the  closing analysis, you as a  business owner,  need to ask yourself these two questions:.

1.  Could the cash advanced  enable me to make  even more (one way or another) than the fees charged?

2.  Can  using factoring companies allow me to stay in business?

It's the answer to these that should ultimately make your determination for you.

 Likewise note that, for the  invoice factoring companies that we're  acquainted with, fees are  negotiated. They are a  pliable ( in  good reason) part of the  contract,  yet remember, as  mentioned, the  transaction must make sense for everyone.

We have been known to  talk terms with  customers that have special demands or situations,  which include:  pretty low profit margins, high monthly sales with (shall we say) less-than-creditworthy customers, commitments of  ensured monthly volume,  possibility for dramatic growth with the industry, etc. For  these types of clients,  factoring companies have been known to  settle for a high-volume discount schedule.

 

This is just one example of  precisely how the schedules can be customized to  fit all concerned--  however please  recognize, we  factoring companies are  more willing to  check out,  talk about,  speaking of,  think of, and  think of all of the  opportunities, but they  need to make sense, i.e., you've got to respect our right to earn a  reasonable fee for the services  delivered.

The  process is  straightforward:  the receivable financing companies  hammer out a deal a fee schedule that we believe will  serve us both. If,  throughout the course of these negotiations, you  think that you need to get (or are entitled to-- whatever) a lower rate than we're inclined to  give, or vice versa, we're both free to walk away from the table.

Prior to Proceeding, Feel  Very good About Your  Receivable Financing Company.

Keep in mind that as your factor is  examining you and your  customers, you should be  checking out your  truck factoring company.  Request references and  very carefully  go through any contracts they may ask you to sign.  Excellent  factoring services  are present to help you  discover  options to your cash flow  concerns while  offering  top quality service and charging  reasonable fees. As you review the  documents, ask questions! A  really good, reliable factoring company will appreciate the time that you are taking to understand the process and talk with you to answer any questions you have.

 Filling out the Application.

 Some of the most  very important  records that you will be asked to  endorse is a Purchase and Sale Agreement, also  described as a P&S Agreement.  Even though a factoring company's due diligence process is more "client-friendly" than the bank loan process, it  could be  quite costly for the  receivable factoring companies.

 

 

 

 

 

 

 

We are a nationwide trucking factoring
company offering

factoring programs the others can't
because of our unique funding capabilities.
The others are restricted by their banks on
what kind of truck factoring programs they can offer.
We are not restricted!
 

We have been providing
trucking factoring services

nationwide for decades and have clients
in hundreds of industries

 

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The transportation business administers an important product to the American economy by moving massive quantities of basic materials, works in process, and finished products over land more often than not from manufacturing industrial plants to retail distribution centers. Trucks are also vital to the construction business, as dump trucks and portable concrete mixers are necessary to reposition the considerable quantities of rocks, dirt, concrete, and additional building components used in construction.

Trucks in America are responsible for the lion's share of freight activity over land, and are critical tools in the manufacturing, transportation, and warehousing markets The significance of trucking is communicated by the industry saying: If you bought it, a truck brought it." " Retail stores, hospitals, gas stations, garbage disposal, construction sites, banks, and even a clean water supply relies completely upon trucks to deliver vital freight.

In fact, long before a product reaches store shelves, the raw products and other stages of production materials that are absorbed in manufacturing virtually any given product are repositioned by trucks. Trucks are essential to U.S. industry, however, quantifying the imprint of trucking on the economy is more difficult, simply because trucking services are so entwined with all sectors of the economy. According to the measurable portion of the economy that trucking represents, the sector directly chips in about 5 percent to the gross domestic product annually. Additionally, the industry performs a critical support role for other transportation modes and for other parts of the economy such as the resource, manufacturing, construction, and wholesale and retail trade industries.

 

 

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Now It's Time to  Get a  New Look at Asset Based Lending, including Trucking Factoring

 

 

 

There are many misunderstandings  amongst CFOs and finance executives when it  pertains to asset-based lending. The biggest is that asset-based lending is a financing option of  last hope - one that only " hopeless" companies that can't  get a traditional bank loan or line of credit would  think of.

 

With the economic downturn and resulting credit crunch of the past few years, though, many trucking companies that might have  secured more traditional  kinds of bank financing previously have  as an alternative turned to asset-based lending. And to their surprise, many have  discovered asset-based lending to be a  versatile and cost-effective financing tool.

 

What Asset-Based Lending Looks Like

 

A  normal asset-based lending scenario  frequently looks something  similar to this: A business has  stayed alive the recession and financial crisis by aggressively managing receivables and inventory and  postponing replacement capital expenditures. Now that the economy is in recovery (albeit a weak one), it  will need to  build up working capital  to fund new receivables and inventory and fill new orders.

 

Unfortunately, the business no longer qualifies for traditional bank loans or lines of credit due to high leverage,  weakening collateral and/or  an excessive amount of losses. From the bank's point of view, the business is no longer creditworthy.

 

Even trucking businesses with strong bank relationships can run afoul of loan covenants if they go through short-term losses,  in some cases  requiring banks to pull the plug on credit lines or decline credit line increases. A couple of bad quarters doesn't necessarily  suggest that a truck business  finds themselves in  difficulty, but  often bankers' hands are tied and they're  required to make financing decisions they might not have a few years ago, before the credit crunch altered the rules.

In  instances like this, asset-based lending (trucking factoring companies) can  supply  the needed  finances to  really help freight businesses weather the storm. Companies with  solid accounts receivable and a  strong base of creditworthy customers tend to be  the very best candidates for  accounts receivable financing loans.

 

With  conventional bank loans, the banker is  predominantly  worried about the borrower's projected cash flow, which will provide the funds to repay the loan.  As a result, bankers pay especially close attention to the borrower's balance sheet and income statement  so as to evaluate future cash flow. Asset-based lenders,  alternatively, are primarily  worried about the performance of the assets being pledged as collateral, be they machinery, inventory or accounts receivable.

 

So before lending, asset-based lenders (trucking factoring companies) will  normally have machinery or equipment independently valued by an appraiser. For inventory-backed loans, they  normally require regular reports on inventory levels,  together with liquidation valuations of the raw and finished inventory. And for loans backed by accounts receivable, they  often perform detailed analyses of the eligibility of the collateral based on past due, concentrations and quality of the debtor base. But unlike banks, they  often do not place tenuous financial covenants on loans (e.g., a maximum debt-to-EBITDA ratio).

freight invoice factoring

Asset-Based Lending(freight factoring companies): The Nuts and Bolts

 

Asset-based lending is actually an umbrella term that encompasses several different  varieties of loans that are secured by the assets of the borrower. The two primary types of asset-based loans are factoring and accounts receivable (A/R) financing.

 

Factoring is the outright purchase of a business' outstanding accounts receivable by a commercial finance company (or factor).  Normally, the factoring company will advance the business between 70 and 90 percent of the value of the receivable  at the moment of purchase; the balance, less the factoring fee, is released when the invoice is collected. The  factoring company fee typically ranges from 1.5-3 .0 percent, depending on such factors as the collection risk and  the amount of days the funds are in use.

 

Under a  contract, the trucking business can usually  pick which invoices to sell to the  factoring company. Once it purchases an invoice, the  invoice factoring company  deals with the receivable until it is paid. The  invoice factoring company will  practically become the business' defacto credit manager and A/R department, " completing credit checks, analyzing credit reports, and mailing and documenting invoices and payments.".

 

A/R financing,  on the other hand, is more like a  typical bank loan,   with some  chief differences.  Although bank loans may be secured by different kinds of collateral including equipment, real estate and/or the personal assets of the business owner, A/R financing is backed strictly by a pledge of the business' outstanding accounts receivable.

 

Under an A/R financing arrangement, a borrowing base is  set up at each draw, against which the business can borrow. A collateral management fee is charged against the outstanding amount, and when funds are advanced, interest is assessed only on the amount of money actually borrowed.

An invoice  generally must be less than 90 days old in order to count toward the borrowing base. There are often other eligibility covenants  like cross-aged, concentration limits on any one customer, and government or international customers, depending on the lender.  In many cases, the underlying business (i.e., the end customer) must be  viewed as creditworthy by the finance company if this customer  constitutes a majority of the collateral