What Truckers Must Know About Freight Factoring

freight factoring new truckers transportation fleet management

Starting a trucking company can be an exciting venture, but it can also be a challenge. While the trucking industry allows for profitable business, it is also an incredibly competitive space. Many truckers get into the business each year but end up failing because people who are great truckers are not necessarily good trucking business owners. 

The Importance Of Freight Factoring

Knowing how to run, stabilize, and grow a trucking business takes a great deal more than simply knowing how to drive a truck and choosing the best route. If you decide that, then be sure to follow these steps to maximize your chances at success. 

Step 1: Get A CDL 

The first thing you need is a commercial driver’s license (CDL) and some experience. If you don’t already have years of experience driving commercial trucks, many trucking companies have their own training programs and some will help pay for CDL school. Many drivers who eventually become start-up owners begin as company drivers and learn the ropes that way. 

Step 2: Have A Solid Business Plan 

As with starting any business, you need written documentation of what you expect your revenue and expenses to be for your trucking or transportation company. Remember that these expenses need to include your own salary, as well as any overhead. A business adviser can help you draft a plan and tweak it as you begin to edge closer toward a realistic vision of what your trucking business will look like. 

Step 3: Know What Kind Of Company You’re Forming 

Know what structure will best fit the business you have in mind. Common structures that trucking businesses take include: 

• Sole proprietorship 
 Limited liability corporation (LLC) 

Each of the above comes with its own sets of pros and cons. For example, if you want to start small, a sole proprietorship will help you through the early years of your business, but if you grow your business to include more drivers and staff, you may eventually want to incorporate for tax purposes. It pays to meet with an accountant in order to figure out what's best for your business. 

Step 4: Be Aware Of Startup Expenses And Financing Options 

Getting a trucking business off the ground will cost a lot of money, as your fleet, equipment, and licensing costs can truly add up. You’ll need to secure some form of financing, and the reality is that many banks and other lending institutions will not loan money to trucking start-ups because the business is so challenging and often so fickle. 

Many start-up owners rely on a form of invoice financing called freight bill factoring. Freight factoring allows you to sell unpaid invoices for a cash advance upfront, which can help you cover expenses when your cash flow is limited. If you don’t have the cash on hand to cover your monthly costs, factoring can give you the flexibility you need. 

Visit Accutrac Capital to see how factoring can provide same day cash advances on invoices as well as a bevy of value-added services to help you get your start-up going, including: 

 Simple document submission 
 Easy to calculate factoring fees 
 Convenient services 
 Access to your account online 24/7 
 Transparent conditions and terms 
 Unlimited, free credit checks 
 Dedicated customer service by trucking specialists who understand your business 
 Fuel discount cards 
 The lowest rates in the industry 

In a perfect world, your trucking customers would pay you the day after you deliver their load and send them an invoice. Additionally, you would always have enough revenue on hand to cover your fuel costs, driver wages and benefits, equipment and fleet expenses, as well as other overhead costs, and you would also have enough cash on hand to build reserve for expansion. 

Factor That Freight And Keep On Truckin'

In the real world however, customers can take between 30 and 90 days to pay off their outstanding invoices — leaving you in the empty-handed as your monthly costs continue to accrue. Don’t get left in the lurch. Consider freight factoring to help you get your trucking business off the ground.

I hope you enjoyed this blog post about freight factoring for new truckers just getting started and fleet management.

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