Monthly Archives: January 2021

How Does Debt Factoring Improve Cash Flow?

Your trucking company is doing everything it can to succeed. Shipments are arriving on time and business is booming. The only problem is your clients are not paying their invoices in a timely manner.

An important part of any business, cash flow in the trucking industry can be sporadic and unpredictable, even at the best of times. Fortunately, debt factoring can help trucking companies maintain consistent cash flow via immediate payments. Below, we will consider the basics of how debt factoring can work for your company.

Will It Improve Your Cash Flow?

Even though it is often referred to as debt factoring, factoring does not involve taking on debt, but rather involves selling an asset you already own. Debt factoring is the process by which a third-party factoring company purchases either a portion or all your company’s invoices. Once an agreement is reached, the factoring company advances you an agreed-upon amount. As a result, you do not have to rely on customers paying their invoices immediately for your business to run smoothly.

Why Would a Business Use a Factoring Company?

There are several advantages to the debt factoring system. Chief among them are the following:

1. Debt factoring provides a quick infusion of cash, allowing for steady company growth – even when invoices are unpredictable. Many businesses struggle to maintain a steady cash flow. In turn, this often prevents them from growing and thriving. Due to the relatively immediate nature of debt factoring, once your invoices are purchased, you can expect a quick and reliable influx of cash to help your business continue to thrive.

2. Debt factoring saves time and administrative resources, including overhead costs. When you sell your outstanding invoices to a factoring company, that company takes over the management of your invoices. Because they are handling customer payments and debt collections, you do not have to pay an employee to handle this task, saving you time, administrative resources, and the overhead cost of an extra employee.

3. Non-recourse factoring helps work against accumulating debt. Non-recourse factoring is a type of debt factoring that protects you from accruing debt if your clients do not pay. For example, if a shipper were not to pay the invoice that you sent them after providing your services, you would not be on the hook for paying back the factoring company under a non-recourse factoring system.

What Are the Different Types of Debt Factoring?

We previously mentioned the benefits of non-recourse factoring. However, it is important to note that non-recourse factoring is not the only type of factoring available. Some companies may use a type of factoring known as recourse. The difference between this type of factoring and non-recourse lies in the risk placed upon you and your business.

Recourse factoring puts your company on the hook for customers who do not pay their invoices. By requiring additional collateral in addition to your invoices, the factoring company has the right to collect money for the unpaid invoice directly from you. Typically, companies that use this type of factoring hold some of your money in reserve.

In a non-recourse factoring agreement, the factoring company fully assumes the risk. Accordingly, if the freight broker or shipper does not pay their invoice, the factoring company suffers the loss. Generally, non-recourse factoring companies do not hold any of your money in reserve, as there is no need to do so.

Advanced Commercial Capital: Risk-Free Debt Factoring

With Advanced Commercial Capital, your trucking company assumes very few risks! Because of the unique nature of our non-recourse freight factoring service, there are no consequences to you if your clients fail to pay their invoices. We also do not require any long-term contracts and do not charge termination fees.

Additionally, we offer:
• Fast and flexible funding options, paying you in as little as one hour for your freight bills
• Strong relationships that foster your success
• And valuable benefits that save you both time and money, from our free fuel discount card program to free credit checks

All of these are just some of the reasons why our clients choose to stay with us for the long haul.
Advanced Commercial Capital can help your trucking company succeed in ways you never thought were possible.

Talk with our team to learn more about how non-recourse debt factoring works by giving us a call at 855.465.4655 or reaching out via our online contact form. We look forward to offering you the easiest and smartest way to factor your freight bills and get the cash you need, without any surprises.

Invoice Factoring Rates: A Complete Guide

Are you considering going into business with a factoring company, but still need some answers before doing so? What kind of risks are involved? When can you expect to receive your funds? How much do freight factoring companies charge? In this article, we will address the determining components of how much freight factoring companies charge, including common pricing, special fees, and more to help get you jumpstarted on the basics.

Common Pricing & Fees

What Is a Factoring Fee?

Factoring fees are the initial percentage of the invoice taken by the factoring company. While they can vary depending on the company you work with, a good rule of thumb is to gauge anywhere between 2-4%. If it is much higher than this, you should know that better options exist, and you may be working with the wrong factoring company.

One exception to this rule may come from non-recourse factoring plans. Because non-recourse factoring poses more of a risk to the factoring company, the costs may be slightly higher. In this scenario, most companies start their factoring fee around 5% for non-recourse factoring and can go as high as 8%.

Monthly Volumes

Some factoring companies also require carriers to meet certain benchmarks known as “monthly volumes.” This term means that your shipping company must factor in a certain amount of loads each month or risk an additional charge. The form this fee takes could either be a single flat fee, or an increase in the factoring fee percentage. In either case, it is important to have a conversation with your factoring company about what their monthly volume requirements are if any, and what the penalty may be.

Reserve Rate

For factoring companies that use a recourse factoring structure, a deposit will be kept on hold as a form of insurance against delinquent payments. Again, the amount can differ between companies, but usually, it is returned to the carrier whenever the factoring company receives their payment.

Invoice Factoring Rates for Companies: What to Look For

Typically, factoring companies in the trucking industry offer a flat fee structure. This system means that you pay a one-time fee that remains the same, no matter how long it takes your customers to pay their invoices.

However, some companies will calculate their invoice factoring rates using a variable structure. As previously discussed, most companies will take a small percentage (2-3%) of the invoice for as long as the invoice goes unpaid. However, an added caveat to this structure could be that the longer the customer takes to pay their invoice, the more you will pay in fees.

For example, your factoring company may charge you 3% for the first 30 days. For every two weeks that pass after those 30 days in which the invoice balance is left unpaid, the factoring company will charge an extra 0.5%. Make sure you are working with reputable clients who will pay their bills on time to avoid such an issue.

What About Long-Term Contracts?

Some factoring companies require you to sign contracts that bind you to work exclusively with them for long periods. However, this is not true of all factoring companies in the industry. If it is important for you not to be tied to one factoring company for the long term, there are options out there for you.

How Does Advanced Commercial Capital Compare?

At Advanced Commercial Capital, we understand that our mission is to help your trucking business succeed. That is why we do everything in our power to offer you the best deals and earn your business every day.

Advanced Commercial Capital has one of the most competitive non-recourse factoring rates in the industry, no long-term contracts, and no set-up or termination fees. We know that making a significant change to your business model is stressful enough, and we do not want to charge you for doing so.

If you decide that factoring is not for you, our Freedom Back Guarantee allows you to leave at any time. While not every factoring company offers this guarantee, not every factoring company cares about the wellbeing of its customers like Advanced Commercial Capital does.

Fill out our contact form, or call us at 855.465.4655 if you’d like to have a conversation about how our freight factoring can be beneficial to your trucking business. We look forward to hearing from you and helping you succeed.

Resources:

https://www.invoicefactoring.com/factoring-blog/factoring101/much-invoice-factoring-cost

https://www.factorfinders.com/cost-of-factoring#:~:text=A%20factoring%20company%20may%20charge,fee%20is%20charged%20up%20front.

https://www.getinstapay.com/blog/common-freight-factoring-fees

Freight Capital: Everything You Must Know

In its purest form, capital refers to the assets you possess which increases your economic standing and power. But what is freight capital and how can it help your company grow? Together, we will outline everything you need to know about freight capital and how to ensure it contributes to the success of your business.

What is Freight Capital?

In the freight industry, capital most often takes the form of your unpaid invoices. If you manage your own invoices, you often wait as many as 90 days before receiving payment. This delay not only stalls the growth of your business but can also hinder your ability to pay bills or meet payroll deadlines. However, there is a better way to handle your invoices.

How to Capitalize on Your Freight Charges

By selling invoices, you can generate immediate cash flow for your business and facilitate immense growth.

Under the traditional model, your process likely looks something like this:
• You haul and deliver a shipment to your customer.
• You send an invoice to your customer for the completion of the job
• You wait for the customer to pay their invoice before seeing any of the profits of your work.

This “hurry up and wait” process is less than ideal to say the least, not to mention inconducive to steady business growth.

But with the addition of a trusted factoring company, the process can instead look more like:
• You haul and deliver a shipment to your customer
• You sell the invoice to a factoring company
• The factoring company then sends you the cash for that invoice while they wait to collect the payment.

Sounds like a great deal, right? It gets better.

Freight Capital: How it Can Help Your Business Flourish

Of course, the quick cash flow is great for growth during prosperous economic times, but freight capital is also debt-free. The money the factoring company sends to you is not a loan, but rather funds you have already earned. You simply get access to the freight capital faster with a factoring company.

Gathering your freight capital in this way can also relieve the worry that comes from waiting for your clients to pay their invoices. Gone are the sleepless nights, wondering if you will be able to pay next month’s bills or your team. Instead, feel the confidence that comes from knowing you will get paid on time for your hard work.

Is Freight Factoring Right for You?

Non-recourse financing from Advanced Commercial Capital can assist your business in creating positive cash flow to streamline your accounts receivable process. If you are tired of constantly worrying over whether you will be able to make payments, pay your drivers, or grow your business, then freight factoring is a solution worth looking into.

There are many excellent reasons to choose Advanced Commercial Capital as your factoring company, such as our lack of long-term contracts and fees.

You can reach out and learn more about us via phone at 855.465.4655 or fill out our online contact form. We look forward to speaking with you and helping your business succeed.