Cash Flow Control: Freight Factoring Vs. Supply Chain Financing

Recently, supply chain financing has entered the arena as a major disruptor in how trucking companies manage cash flow. Sometimes referred to as “reverse factoring,” supply chain financing claims to benefit trucking companies, suppliers, and buyers at once.

But is supply chain financing all it’s cracked up to be? And how does it impact cash flow for trucking companies compared to tried-and-true methods like freight load factoring?

Extra Layers Means Extra Waiting Times

Supply chain financing is a method by which the buyer initiates the process by agreeing to pay the invoice early in exchange for a discount.

However, the buyers will usually wait upwards of a week to check the products delivered to ensure the shipment is complete and undamaged.

The extra layer means the company waiting on payment for invoices could be waiting up to half a month or longer to see any revenue.

Extra layers equate to extra waiting times, and the trucking industry relies on fast cash flow to keep things moving.

Non-Recourse Isn’t an Option

There is no guarantee that a specific buyer will be able to provide supply chain financing from one invoice to the next because the method hinges on the amount of cash they have on hand to cover the invoices.

Additionally, if a company files for bankruptcy, any revenue received in the 90 days before the official filing may have to be returned. Ask anyone who used supply chain financing for deliveries made to Toys R’ Us.

Keep it Simple, Keep it Safe

When all is said and done, supply chain financing may seem like an alternative to freight factoring, but the potential problems do not make it a viable and secure solution.

Factoring offers a much faster turnaround on invoices and can offer credit insurance to qualifying customers. Trucking companies submit invoices for factoring, and there are no extra layers or caveats to holding cash flow.

Express Freight Finance offers the most comprehensive freight factoring services. We turn invoices into cash within 24 hours and provide non-recourse financing, so you do not have to worry about your customers’ financial situations.

We also offer a suite of tools you can use to manage your account and check on the creditworthiness of your customers before you even submit their invoices for factoring.

Contact Express Freight Finance today to boost your cash flow directly and securely without adding red tape to the process.