When to Start Factoring and What to Know
Most business today is built on some form of financing, whether it is a business infrastructure loan or a long-term credit line. The trucking industry is no different, but many companies are not sure what kind of financing can help and or what fleet factoring can provide that a typical business loan cannot. Fleet factoring is really not as complicated as it might seem, and the best part is that choosing a company like FleetOne Factoring with expertise in the financial needs of the trucking industry makes it even simpler. If the question is when, the answer is now.
3 Common Concerns
1. Credit Score: Many small fleets might worry about their credit score as a factor for eligibility, but it is in fact the credit history of your customers that factoring companies are most concerned about. A factoring company must examine the financial health of your customer base before they can offer you factoring agreement.
2. Company size and history: Again, because the factoring companies are most interested in your customer credit scores and financial healthy, the size and or length in business of your own company is not generally an issue. As long as you have reliable and credible customers, your eligibility for fleet factoring is assumed.
3. Balance sheets and assets: Because most business loans are based on credit history, balance sheets, cash-flow statements and assets, many companies worry that they will not be eligible for factoring. Simply put, they could not be more wrong. Factoring agreements are not based on how long you have been in business or how robust your balance sheets are. They are not even concerned about capital or credit because it is not your financial health that concerns them. It is your customer’s ability to pay invoices that influences their decision.
If you are aligned with customers that are in good standing financially and have strong credit and payment patterns, you will likely qualify for fleet factoring – which means the time is right to start experiencing the advantages. FleetOne Factoring can guide you in the process and customize your needs.
Why Start Now?
- Cash Flow: The obvious answer is immediate cash flow to meet the everyday fleet demands. What is not so obvious is what these demands can sometimes entail. Everything from employee insurance and benefits to fuel costs and vehicle maintenance. Factoring will allow cash flow to cover the demands that seem to get unnoticed in the everyday challenges of deliveries.
- Payment Remittance: A common customer remittance can be anywhere from 30 to 90 days. Many fleets cannot wait that long for payment. Fleet factoring provides same day payment by taking on the collection responsibilities of the workflow.
- Company Growth: Fleet operations can sometimes feel like a responsive business successful only on the deliveries that are made from day to day. It is common that growth strategies are dismissed because of the lack of capital. An experienced factoring company with a solid financial structure can help to provide the capital and flexibility that is required to expand and grow. Because factoring is not a bank loan, your company will assume no debt giving you peace of mind and confidence needed to meet your growth goals.
- Gaining Credit and Credibility: Because factoring does not rely on your own credit history, new and smaller companies can take advantage of financing without the worry of having no credit history. And while factoring enables growth in the company, the results of that growth will allow for financial sustainability and structure, which in turn leads to a stronger credit history and business credibility of your own.
- Collections and Invoicing: An added benefit of working with a fleet factoring company is that they take on the responsibility of collections, so you don’t have to. A fleet factoring company like FleetOne can focus on your financials while you focus on trucking.
When you started your company, you knew there would be challenges. We are often caught in the complacency of “business as usual” and the idea that we need to suffer some setbacks and obstacles before we can succeed. Luckily, that is not always the case. There are ways to address those obstacles before they become hindrances. No matter how small or large, or young or old your fleet is, factoring can offer not only benefits and clear advantages to help. And because fleet factoring is a debt free solution, you can have the confidence to make bigger decisions without being held hostage by a bank loan. If you are tired of “business as usual,” waiting 30-90 days for a payment and longing for your business to grow faster — Start Now! With the right factoring company, you can have it all and more.