Trucking is not a “low overhead” business. Between fuel, maintenance, lodging, insurance and other costs, trucking expenses need a constant cash flow just to operate at basic levels. However, in an industry where payments are notoriously staggered, how can independent drivers and fleet owners ensure trucking expenses are covered.
The Pitfalls Of Short-Term Loans
When cash flow is sluggish, many people turn to short-term loans to cover trucking expenses, until payments start coming in from customers. While loans can certainly cover trucking expenses, they also saddle drivers and fleet owners with debt. Loans can end up creating a larger problem, when all is said and done. When payments are staggered or delayed, the debt from the loan may not get repaid according to the bank’s schedule, which can place truckers in danger of defaulting, and ruining existing credit ratings.
The Dangers Of Merchant Cash Advances
Merchant cash advances are very popular now across a number of industries, but they can negatively impact truckers and fleets. The idea of getting an advance in capital without the risk of debt may seem tempting, but there is always a catch. Frequently, the high interest rates and other fees can place a severe strain on revenue. Keep in mind that merchant cash advances are repaid automatically and electronically from credit card transactions, so customers would have to pay on the spot, and not via check, in order to pay down the balance owed on the MCA.
Using Freight Bill Factoring To Cover Trucking Expenses
Fleet owners and independent drivers are using freight bill factoring to cover trucking expenses, ensure a strong cash flow, and avoid owing money to banks and other lenders. When a shipment is delivered, the bill of lading is submitted, it is converted to cash. There is no debt, no payment schedules, and no hidden fees. Freight bill factoring is the easiest way to get the revenue you are owed, while simultaneously getting rid of staggered payment schedules. Additionally, freight bill factoring can work in conjunction with fuel cards, which can keep your fleet on the move, without having to figure out how to cover trucking expenses.
Keep Your Trucking Expenses Covered
At Express Freight Finance, we understand the importance of cash flow in the trucking industry. We have background in trucking, which is why we strive to offer the best freight bill factoring solutions in the country. We also have a fuel card program that goes above and beyond the others. Contact our offices today to free up capital tied to unsettled accounts.