One of the most common obstacles facing fleet owners and independent owner-operators alike is the lag in customer payments from open invoices. Drivers and fleet owners who issue invoices to customers with aging periods of 30 days or longer, can quickly run into cash flow problems. In order to take the strain off of cash flow, many people in the trucking business are turning to freight factoring.
How Billing Schedules Cause Cash Flow Problems
When a customer is issued an invoice, they typically have a minimum of 30 days to remit payment. In some cases, the aging window can be as long as 180 days. Because customers usually wait the full period – or close to it – to make payments on their bills, cash flow problems arise. Your trucking business is suddenly spending more money on the basics, like fuel, advertising, maintenance, utilities, and payroll, while very little capital is coming into your operation. If the situation is prolonged, or customers are late with payments, cash flow problems can get to the point where individual owner-operators cannot afford the cost of fuel to make long hauls. In the case of fleet owners, cash flow problems may mean that payroll cannot be covered by existing financial resources.
Correcting Cash Flow Problems
There was a time when, if a customer was late with payments on an open invoice, business owners would turn things over to collection services. Unfortunately, collection services add yet another layer to getting payments, and can actually add up to 45 days before drivers and fleet owners see revenue. In order to sidestep this, people are turning to freight bill factoring.
Using Freight Factoring To Correct Cash Flow Problems
To expedite payments on open invoices, freight factoring converts bills to cash within 24 hours. The process is very simple. When an invoice is generated, it is submitted to freight factoring services, and revenue is issued to you or your trucking business. This allows you to not only get the revenue you are owed on your backlog of open invoices, but also keep on top of finances, moving forward. Additionally, freight factoring provides a centralized source of revenue, which eliminated the time and human resources used to track down payments from multiple customer accounts.
Express Freight Finance Can Help
If you are experiencing cash flow issues, or if you would like to avoid a financial strain due to unpaid invoices, contact Express Freight Finance. We provide a comprehensive freight bill factoring program to ensure you maintain a healthy cash flow for long-term success.