The debt cycle is nothing new to trucking companies. If fleet owners are not leasing vehicles and other equipment, the chances are pretty good that they took out a loan to make their purchases. Similarly, when there is a merger or buyout, trucking companies turn to loans to cover the costs and keep transactions on track.
This debt cycle can prevent growth for trucking companies. Fortunately, there is a way to break out of the debt cycle and reduce—or even eliminate—the need for loans.
Taking on Debt to Get Ahead
The standard model in the trucking industry does not allow many trucking companies to get ahead. Drivers pick up shipments and make deliveries, and then there is a waiting period ranging from 30 to 90 days to get payments on receivables.
The gaps in cash flow prevent trucking companies from accumulating the capital they need for growth projects or large purchases, resulting in debt from loans to cover the costs. Soon, a good portion of the money coming in is going to pay off debt in addition to regular expenses, further diminishing the potential for growth.
Lowering Liabilities and Increasing Cash Flow
Accounts receivable financing for the trucking industry, otherwise known as freight factoring, speeds up cash flow to eliminate gaps in revenue. As receivables are generated, they are sent electronically for factoring services, and money is made available within 24 hours.
The improved cash flow means trucking companies have fast access to capital instead of having to wait a month or longer to receive payments. This allows trucking companies to sever their reliance on debt, pay down existing loans, and rack up capital for major growth projects. Since factoring can be performed via email, fax, or smartphone, there are no delays other than confirming the information received.
Stop the Debt Cycle Today
Express Freight Finance offers the most comprehensive factoring services, designed exclusively for the trucking industry. Our team has deep roots in the trucking industry, and we understand the needs of trucking companies, fleet owners, and independent owner-operators. Contact Express Freight Finance today and break out of the debt cycle.