Freight Factoring Can Help You Navigate 2019’s Economic Waters

When JP Morgan economists recently predicted that the U.S. economy would likely slow but not stall in 2019 due to higher interest rates, a fading fiscal stimulus, and a lack of workers, people took notice. “After a sharp fall in valuations in 2018, steady economic growth and less dollar strength may provide some room to rebound in 2019,” they explained, but warned that any such climb will likely be bumpy.

The sentiment is shared by a number of economists in the know. Because the economy roared to life in 2017 and 2018, it looks like we’re now in the mid to latter parts of the surge, at least according to Ibrahim Bayaan, chief economist at FreightWaves. Still, that apparently doesn’t “mean a recession is right around the corner” but many industries are nevertheless bracing for challenges they might not have had to face over the last two years.

Ask most trucking carriers and they will likely say that profit margins often mean pennies on the dollar, and the inability to reinvest in equipment and new drivers is a reality when you simply don’t see ample enough earnings.

Another challenge for trucking companies is the fact that there is often so little cash on hand, making it very difficult to seize new growth opportunities. Part of the problem is notoriously slow paying customers, who will often take 30 to 90 days to pay on their invoices. Trucking company owners who want to brace for an uncertain economy in 2019 may want to reconsider their financing options.

Every business, no matter its size or age, requires some form of financing, and in the trucking industry, owners have been utilizing the flexibility and convenience of freight factoring to keep their cash flow from stalling and to handle day-to-day operating expenses. Knowing they have access to funds when they need them allows trucking businesses to accelerate growth — just click here to see how factoring as an ongoing financing strategy puts companies in a position of strength rather than weakness.

Streamlining your cash flow by selling unpaid invoices at a discount is a major tactic that helps struggling trucking companies get a hold of money they need to cover overhead expenses such as driver salaries and benefits, equipment maintenance, and fuel costs. 

If your customers are regularly taking up to three months to pay on jobs you’ve already completed, factoring your accounts receivable will likely be helpful because it allows you to secure a large portion of the value of that invoice upfront, regardless of how long that client actually takes to pay. Further, the more invoices you factor, the more funding you will ultimately have access to.

Freight factoring is an ideal option for:

  • businesses in transition or who are experiencing a lean year
  • high-growth companies who lack sufficient working capital
  • startup operations
  • companies who are unable to secure funds from banks or other traditional lenders, and
  • companies experiencing a lean or otherwise challenging year

Accutrac Capital is one of many dependable factoring entities that will work with your company to alleviate your cash flow and financing issues, by providing back office support through invoice collection and risk mitigation through unlimited credit checks on current and prospective customers, on top of generous cash advances.

They specialize in the trucking industry as well, and offer plans that cater to trucking companies specifically. Consider flat fee factoring, where carriers can gain a same day cash advance of up to to 97% of their invoice starting at 1.59% of the total amount. 

For larger operations, a factoring line of credit is also available and starts at 0.022% per day. Finally, if a carrier is confident that their customers will pay on their invoices relatively quickly, but requires cash in the interim, flex factoring starts as low as 0.49% of the invoice value for up to 10 days. 

As the economy begins to balance after a very strong two years, the transportation industry can expect to see some turbulence. If your business wants to position itself for growth and to be ready to pivot as new opportunities arise, a factoring company that specializes in the trucking industry could be just what you need in the new year.

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