Author Archives: adcomcap

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.

Invoice Discounting vs Factoring

With the wide range of potential financing options available today, it can be difficult to know which is best for your business. Which option will serve all my needs? Which can I be approved for? Luckily, you do not have to make your decision alone.

Here, we will look at the specifics of invoice discounting and invoice factoring, comparing the two and describing some of the benefits or potential drawbacks of each. By the time you finish this blog, you will be well informed and well on your way to making the best decision for your business. Let’s get started.

Invoice Discounting

Invoice discounting allows business owners to better control the value of their unfinished sales. In invoice discounting, when an invoice is sent to your customer, a proportion of the total amount becomes available from the lender, providing a valuable source of working capital throughout the month.

While very similar to factoring, your customer may not be aware that you have taken on cash flow finance when you use the power of invoice discounting. You remain in control of your sales ledger, collecting payments as normal, and sending out reminders.

This system allows you to maintain your own style of communication and standards of customer service. In many cases, those factors are key to the success of your company.

Factoring

Like invoice discounting, factoring also allows you to turn your sales ledger into working capital. However, as stated previously, when you decide to pursue a factoring option, your customers will be aware you are using this method. The factoring company will be the one communicating with them, sending reminders for payment.

There are also significant benefits to factoring. Non-recourse factoring with Advanced Commercial Capital protects you from accruing debt. If your customers do not pay their invoices, you are not held responsible, and the factoring company takes on the risk involved.

Additionally, your ability to be approved for invoice discounting is dependent upon your own reliability and credit, whereas factoring companies such as Advanced Commercial Capital make their decisions based on the reliability and credit of your clients.

Which One Best Suits Your Needs?

Even with the differences laid out, it can still be difficult to know which is best for you. However, invoice discounting may be a promising option if:

• Your credit control procedures are proven to be effective
• You have minimal to no debt
• Your customers generally pay on time
• You meet the minimum level of turnover required by the lender

Conversely, if you do not carry out credit management processes in-house, invoice factoring is likely the better option.

Work with Advanced Commercial Capital

Advanced Commercial Capital is in the business of helping your business grow through fair and honest invoice factoring. If, after reading this blog, you would like to have a more in-depth discussion about your financial needs, including whether invoice factoring may be right for you, call our office at 855.465.4655 or fill out our online contact form today.

Guide: How to Become a Freight Broker with no Experience

If you have been looking for a way to boost your business while reducing time spent on the road, starting a freight brokerage may be the perfect solution for you. While it used to be quite difficult to start a freight brokerage company, new regulations created in the 1970s now make this opportunity more attainable for individuals across the country.

No experience? No problem. In our comprehensive guide on how to become a freight broker, we debunk the myth that prior industry experience is necessary. Discover essential strategies and insights tailored for beginners looking to enter the logistics world. From understanding industry regulations to mastering negotiation tactics, this guide equips you with the knowledge and confidence to kick-start your career as a freight broker. Explore the possibilities today and embark on a rewarding journey in the logistics industry.

Step 1: Gain Industry Experience

To facilitate relationships in the trucking industry, it is important to understand the ins and outs of the transportation industry.

Insider knowledge and understanding of the industry is a great place to start. Whether you’ve worked at a shipping company previously or with another freight brokerage, this work can give you insights into what one side of the industry is looking for from the other, putting you in a unique position to deliver the best service.

Additionally, you can help facilitate the development of your freight brokerage company with strong soft skills such as math, critical thinking, and communication. If you are looking for more official training, there are many online classes and educational books available.

Step 2: Develop A Business Plan

A strong business plan is really where your freight brokerage begins. In your business plan, you will specify your niche and target customers, fleshing out the specifics of how your business will run. A plan will also give you the ability to register your business name and apply for a line of credit to get started.

Step 3: Find the Right Carriers

As a freight broker, your goal is to develop strong working relationships with the right carriers for your business. Ideally, the carriers you work with will be a part of the niche you have chosen and will be trusted, reliable, and professional. While there are several online directories where you can peruse carrier options, you may already have direct references and connections with the carriers you would like to use, as mentioned in step one of this guide.

If you are having trouble deciding between several options, remember that there is nothing wrong with testing out your top contenders and going with the best option.

Step 4: Learn How to Handle Freight Brokerage Legal Affairs

Before beginning your business operations, you will need to address two major legal necessities: obtaining a USDOT number and becoming licensed as a Motor Carrier with Operating Authority.

A USDOT number is a unique identifier for your company that allows quick access to future safety information. That information is gathered during accident investigations, inspections, audits, and compliance reviews.

To apply for a USDOT number, you can follow the steps to register online at the Federal Motor Carrier Safety Administration (FMCSA) website. After you receive your USDOT number, you will continue with the process of getting licensed as a Motor Carrier with Operating Authority. The total processing time for this is between four to six weeks.

Once your application has been approved, the FMCSA will send your MC number. When this is issued, it is posted on the register page of the FMCSA. After a 10-day period, in which people may protest your registration if they find a problem, you are officially granted MC authority and are ready to start your business.

Step 5: Hit the Ground Running, and Start Succeeding

Now that you have experience, a business plan in place, and all necessary legal affairs handled, it is time to open your business and get started! With the groundwork laid, you have everything you need for your freight brokerage firm to find success.

FAQS About Freight Brokering

What qualifications do I need to become a freight broker?

Typically, you need a high school diploma, strong organizational skills, and knowledge of the logistics industry. A freight broker license and bonding are also required.

How do I obtain a freight broker license?

Apply for a freight broker license through the Federal Motor Carrier Safety Administration (FMCSA) by completing the online application, paying the fee, and providing proof of bonding.

What is a freight broker bond and why do I need it?

A freight broker bond (BMC-84) is a financial guarantee that ensures you meet your contractual obligations. It protects shippers and carriers in case of non-payment.

Are there any training programs for freight brokers?

Yes, there are various training programs and courses available that cover the basics of freight brokering, industry regulations, and best practices.

What skills are important for a successful freight broker?

Key skills include strong communication, negotiation, organization, problem-solving, and an understanding of transportation logistics.

Advanced Commercial Capital: An Industry Resource

Advanced Commercial Capital is here to help the freight industry continue to grow with confidence. To get in touch with our team, call our office at 855.465.4655 or fill out our online contact form today.

What Should I Know About a Freight Broker Line of Credit?

As intermediaries between carriers and shippers, freight brokers face distinctive business challenges, from managing cash flow to learning about the credibility of companies they work with. A freight broker line of credit can assist brokerages in managing financial stresses, overcoming challenges, and understanding the trustworthiness of potential clients.

Primary Challenges for Freight Brokers

Why is a line of credit necessary for freight brokers? Business credit for trucking is essential to address challenges common to most freight brokerages, including surety bonds, insurance, competition, liability, and cash flow.

1. Surety Bonds

By definition, “a surety bond is a promise to be liable for the debt, default, or failure of another. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee.)”

Every freight broker is required to obtain a surety bond from the government to operate legitimately in the United States. This agreement between the broker and the government is a guarantee that the freight broker will meet all contracts with shippers and carriers.

Freight brokers are required to obtain a $75,000 surety bond. If a freight broker does not live up to its contracts with a shipper or a carrier, the surety bond assures shippers and carriers that the broker has the cash or assets to cover at least the amount of the bond.

2. Insurance

Freight brokers can procure surety bonds from insurance companies. However, brokers are required to pay premiums. To lower premiums, freight brokers can demonstrate that their company is low-risk and reliable with good credit scores.

3. Competition

The freight broker industry is extremely competitive. Once again, low-risk engagements and reliability help freight brokers stand out amongst the competition.

4. Liability

Although not always the case, freight brokers are sometimes liable for shipment or equipment damages during travel. To limit liability, freight brokers should evaluate the dependability and credibility of potential carriers before accepting new engagements.

5. Cash Flow

Financial strain is one of the most significant challenges faced by freight brokers, specifically consistent cash flow. While starting a freight broker business is relatively inexpensive, financial challenges arise quickly. Because carriers are often paid before shippers are billed, cash flow can become clogged or entirely depleted. As the intermediary between shippers and carriers, transportation brokers are often forced to satisfy and balance both parties involved before acknowledging personal cash flow issues.

However, unacknowledged cash flow issues eventually cripple a company. Amid balancing such significant challenges, freight brokers may look for additional financial assistance to promote business growth and livelihood. Freight factoring is one such option.

Benefits of a Freight Broker Credit

1. Surety Bonds & Insurance

As mentioned, strong business credit scores can help freight brokers appear low-risk, credible, and reliable to insurance companies, often resulting in leverage to negotiate lower premiums.

2. Competition

Again, freight brokering is a competitive space, and strong business credit will make your company stand out among the rest. Additionally, business credit may allow your freight brokerage to negotiate for higher prices. Shippers and carriers appreciate low-risk, reliable brokers.

3. Liability

One business credit service explores the emphasis placed on credibility in the freight brokerage industry for both shippers and carriers.

• Shippers “will pull credit because they’re trusting the broker with their load. The brokers credit will offer detailed information about payment patterns and financial responsibility (or lack thereof).”
• On the other hand, carriers “will pull the brokers credit because they want to make sure there is a consistent history of payments on time. Carriers need to be able to depend on timely payments from the broker to fund their operations and turn a profit.”

Likewise, as a broker, you should also check business credit files of potential shippers and carriers. As mentioned, business credit files help you choose the best companies to engage with, reducing liability risk.

4. Cash Flow

A freight factoring line of credit for brokers directly addresses cash flow issues. In the freight factoring process, the factor purchases invoices directly from the broker, providing the brokerage with immediate cash needed to pay carriers. The factor then waits to receive payment for the invoice, instead of the freight brokerage. Factoring provides companies with cash needed to continue business on slow-paying invoices.

Factoring Line of Credit vs Bank Line of Credit

When considering financial assistance, freight brokers may consider acquiring a bank line of credit in comparison to a factoring-based line of credit. While a bank line of credit may be viable for several issues, consider a few potential downsides to pursuing this form of financial assistance as a freight broker:

1. A bank line of credit can add to the debt already carried by the broker. As with any business, avoiding debt when possible is best.

2. Additionally, a bank line of credit has its limits. Eventually, a maximum borrowing limit will be met, stopping cash flow. Once the broker can no longer rely on the bank line of credit, he/she is forced to rely on shippers once more, often an unreliable source of cash flow.

Advanced Commercial Capital

At Advanced Commercial Capital, we protect our clients from unpaid freight invoices due to fraud, bankruptcy, or delinquency – without any surprises. To learn more about the ins-and-outs of a freight factoring line of credit, reach out to our team at 855.465.4655 or via our online contact form!

Payroll Factoring Guide for Small Businesses

In tough financial situations, such as a global pandemic, finding ways to make payroll and ensure your employees are taken care of may keep you tossing and turning at night.

However, there is a solution for every problem, and a financing option known as payroll factoring may be just the answer you have been looking for. Below, we’ll explore everything you need to know about what payroll factoring is and how it can help your business continue to thrive.

Payroll Factoring: What Is It?

Payroll factoring is a method by which businesses with outstanding invoices and long net terms can create a steady cash flow earlier than what they would normally expect from their clients. For example, if your net term is 30, or even 60 days, multiple payment periods can hit before you receive full payment from your clients.

Contrary to some beliefs, payroll factoring isn’t a loan, but rather a transfer of invoice from your business to another called a factoring company. The factoring company then supplies you with an advancement, allowing your business to continue operating smoothly.

Payroll Factoring Benefits

1. Avoiding Layoffs
Finding the right people for the right roles is never an easy task. You worked hard to create the team you have in place, and payroll factoring can help ensure that you can keep your team happily employed and motivated to stick with you.

2. Preventing Lawsuits / Additional Debt
Failing to pay your employees for their work will put you at risk for governmental tax penalties, lawsuits from your employees, and accruing additional debt. Payroll factoring ensures you can pay your employees on time and avoid these issues before they even start.

3. Preserve Your Savings
It is common for business owners to take a pay cut or dip into their savings to pay their employees when money becomes scarce. While an admirable decision, payroll factoring makes this particular sacrifice unnecessary.

How Payroll Factoring Works

While different factoring companies will have different policies, the general process is much the same. At Advanced Commercial Capital, we recommend first researching your options thoroughly to find a factoring company that fits your specific needs.

After you find someone whom you trust and can cater to your type of business, you will sign a factoring agreement. The stipulations, fees, and general guidelines will be something you should look over closely to ensure you are getting the best deal possible. After that agreement has been signed by both parties, the payroll factoring process will begin.

Finally, once your client pays the invoice, the factoring company will send you any remaining balances, known as the reverse amount.

Can Your Business Benefit from Payroll Factoring with Advanced Commercial Capital?

If you have a business with employees, then yes, payroll factoring will be beneficial for you, your employees, and the overall success of your business. Advanced Commercial Capital understands the strain that owning a trucking business with unpaid invoices can create, which is why we offer non-recourse freight factoring services.

Non-recourse factoring is designed to give you the maximum benefit possible from a factoring program, as our company bears the credit and collection risk on purchased invoices. This method of payroll factoring means that we won’t charge you if your customers fail to pay their bills.

To learn more about our non-recourse factoring services, and to see if Advance Commercial Capital is the right support team for your trucking business, give us a call at 855.465.4655 or fill out our online contact form today.

EFS: The Best Fuel Card for Truckers

Fuel is among the most significant expenses for trucking companies. As fuel prices regularly fluctuate, fleet managers often feel burdened by the rapidly increased costs, hesitant to settle into any fuel price lows. Therefore, properly budgeting for long-term profitability can prove difficult. Additionally, the strain of unpaid freight invoices due to fraud or delinquency often intensifies financial stresses.

Trucking companies can turn to various financial assistance methods, including a fuel discount card program. Below, we explore everything you need to know about an EFS fuel card – from the definition of a discount card to an application guide.

What is an EFS Fuel Card?

An EFS fuel card offers a convenient, powerful, and secure payment solution for transportation companies, regardless of fleet size. Across North America, fuel cards are commonly accepted at thousands of locations. The EFS card is designed to meet customized financial demands and consolidate transactions onto a single card.

Fuel cards offer discounts on diesel by the gallon. How does this work? Essentially, fuel card providers form partnerships with fuel stations, allowing card holders to receive exclusive discounts from these specific fuel stations.

Specific discounts vary by location. However, the cumulative savings brought by fuel programs can be extraordinarily beneficial for trucking companies.

What Are the Benefits of an EFS Discount Fuel Card?

EFS helpfully lists a few of the primary fuel discount card benefits, and we have expanded on each:

Increased Purchase, Authorization, and Financial Controls: Many EFS fuel cards allow for customized security restrictions. For example, you may choose to require driver ID authorizations before a purchase. Additionally, EFS fuel cards can easily be deactivated to prevent unauthorized spending.

Consolidated Transactions: The conglomeration of transactions onto a single fuel discount card allows for better management of purchases, fuel, cash advances, etc., and impactful fuel savings at most national, regional, and independent truck stops.

Significant Fuel Savings: Although precise price fuel savings differ depending on the fuel card program, many offer significant benefits from bulk fuel purchases and reduced pricing during filling.

ATM/cash Access: Many fuel cards allow for easy access to cash/ ATMs.

Real-Time Online Account Reconciliation: Access to real-time data allows fleet managers to add or delete drivers or vehicles, as the business develops.

Online and Mobile Account Management: Online account management allow for bill payments and customized purchase controls. Additionally, online management is convenient! You can track purchases in a single location, providing for easy accounting and less physical paperwork.

Fuel Card Industry Trends

Many of the current benefits of EFS fuel discount cards step from industry trend-based development. A few of the most common industry trends include:

Omni-channel experiences: The entire card industry is trending towards creating a customized experience for the holder. Many fuel cards have developed customized experiences for the user as well. For example, certain programs help the cardholder identify the nearest service station, based on location.

EMV migration: Chip-based cards are extremely common now, even within the fuel card industry. Chip-based fuel discount cards offer increased security and control over “offline” credit card transactions.

Telematics data: Some fuel card programs have embedded telematics interface into product offerings, providing data designed to improve fleet management and operating efficiency.

CDCVM security: The Customer Device Cardholder Verification Method (CDCVM) is a security feature designed to identify the individual utilizing the fuel card.

How Can You Apply for an EFS Fuel Card?

Applying for an EFS fuel card is simple and streamlined as most applications only require basic information. At Advanced Commercial Capital, two applications are required:

1. EFS Master Services Agreement

The first, an EFS services agreement, only requires a simple list of info, including:

-Legal name
-Primary address
-Phone number
-Fax number
-Primary contact
-Primary contact phone number
-Billing contact
-Billing contact address
-Billing contact phone number
-Billing contact fax number
-Number of active vehicles in your fleet
-Number of active drivers/ cardholders

Depending on the number of vehicles in your fleet, an account set-up fee is required. If applying for an EFS fuel card with Advanced Commercial Capital, we cover the set-up fee in full. After the basic information has been provided, authorization is required, and the application is complete.

2. Customer Application

The second simple form is the customer application. Once more, information required to complete the final step of the application is straightforward. For example, the following items are included (but are not limited to):

-Corporate name
-Location address
-Website URL
-Location phone number
-Federal tax (or CRA) ID number
-DUNS number
-DOT number
-Years in business
-MC or provincial operating license
-Ownership type
-Number of cardholders and trucks
-Amount of average weekly fuel, check, and other
-Description of transportation services provided to clients

Once the final application has been authorized, you are finished applying for the EFS fuel card program. Both components of the application with Advanced Commercial Capital can be found at an easily-accessible EFS application pdf. If you have any questions related to the EFS program, feel free to call us at 435.673.4655 – or get in touch with our EFS/FTS Plus representative, Amber White, at 901.474.0835!

Advanced Commercial Capital’s Fuel Discount Card & EFS Checks

At Advanced Commercial Capital, we are proud to partner with EFS and offer our clients access to a fuel discount card and an easy-to-use check product. Part of the FTS Plus discount network, the fuel discount card allows for fuel discounts at the majority of national, regional, and independent truck stops. Additionally, through the FTS Plus network, truck drivers can save money on tires, oil, truck parts, insurance, and a wide variety of additional products and services.

With your EFS account, you will be able to issue checks, similar to Comchecks and T-Checks, to transfer money to your drivers when needed. EFS Checks are easy to use, available at truck stops over the country, and have one of the lowest fee structures in the industry.

EFS Fuel Card Discounts

While fuel card discounts fluctuate with fuel prices, a few examples of fuel savings include:

Pilot Flying J: retail price minus 10 cents

Loves: retail price minus 5.5 cents

TA: retail price minus 5.5 cents

Other Regional and Independent Locations: average discount up to 20 cents per gallon

Advanced Commercial Capital

We understand the financial strains that accompany managing a trucking business. Unpaid invoices and fluctuating fuel costs can be detrimental. This is why our non-recourse freight factoring service includes a fuel discount card program.

What is the benefit of utilizing a non-recourse freight factoring service in conjunction with your fuel discount card? Of course, every company has to determine if freight factoring is the right financial service – many trucking businesses in need of immediate cash, experiencing economic difficult, waiting on a traditional bank loan, or in need of increased business stability find that freight factoring is a profitable solution.

Why non-recourse factoring?

Non-recourse factoring is a factoring method where the factor (our company) bears the credit and collection risk on purchased invoices. Because we won’t charge you back when your customers don’t pay their bills, there is no reason to hold reserves. To learn more about our non-recourse factoring services, give us a call at 855.465.4655 or reach out via our online contact form!

The Future of Trucking After the Pandemic

The Novel Coronavirus has impacted every industry in unique, unprecedented ways. Some businesses were impacted immediately, especially those without the ability to adapt to curbside services, online orders, or digital procedures. Individuals across hundreds of companies have experienced layoffs or furloughs.

Certain industries – including grocery stores and delivery services – faced sudden, rapid growth, with a swift and urgent need for staff. The transportation industry sits between the growth and decline of hundreds of companies. How has trucking been impacted by the coronavirus pandemic?

While truckers remained busy moving freight to keep hospitals, grocery stores, and Amazon warehouses stocked with essential items, tougher times may be ahead. As state and local governments keep isolation orders in place, economic impacts increase in severity – and truckers will be affected.

In the content below, we explore the future of trucking after the coronavirus pandemic, to the best of our knowledge.

Freight Volumes

The need for freight volume in certain sectors soared with shelter-in-place orders and social distancing guidelines. Shipping and delivery companies, grocery stores, childcare providers, and hospitals have required unprecedented amounts of food, hygiene products, medical supplies, and other essential items. As people’s buying habits suddenly changed to pandemic needs, truck drivers have been required to continue hauling loads across the country.

However, as non-essential businesses closed their doors and hundreds suffered from unparalleled layoff/ furlough rates, the demand for “non-essential” items plummeted exponentially. Thus, while certain sectors soared in freight demands, others dropped to nearly nonexistent requirements.

Overall, freight volumes are starting to decline – a decline predicted to accelerate over the coming weeks. The Trucker’s Report states:

Even where people are still working and still making money, social distancing practices and worries of an economic recession are keeping people from spending money on non-essential items. As demand for those goods falls, so too does freight volume… Some sectors are already feeling the squeeze, but if the outbreak lasts much longer, the strain on the economy and freight volumes will only get worse.

The Trucking Industry’s Response to Plummeting Freight Volumes

Small, independent transportation companies are hit the hardest. As freight volume plummets, some face an uncertain future. One independent driver, Timothy Barret, shared his concern for the future of his business should the freight decline continue. Barret primarily hauled automotive parts for concerts and live events, two industries severely impacted by COVID-19.

“I am basically shut down,” Timothy stated. “I can go broke two ways: hauling for nothing or not hauling. I’m not going to [run loads] and exchange money for fuel and drive the truck for free.”

Although small to mid-size companies may be impacted most severely, even large carriers may have to lay off workers if the decline proceeds on the projected path.

Drop in Oil Prices

Initiated by a Saudi Arabia-Russia feud over oil prices, crude oil prices around the world have dropped – negatively impacting freight rates for independent truckers. At first glance, lower diesel prices may seem beneficial, lowering operating costs. However, lower oil prices will impact already slow freight within the oil sector (accounting for 3-5% of all truck freight).

Jim Meil from ACT Research commented:

The drive for fuel efficiency and the advances in technology are some of the crowning achievements of truck OEMs… It’s great to see trucks get mileage that was unthinkable even 10 years ago with 8.5 mpg and higher in some cases. But that’s a bigger benefit when diesel is $4 or higher rather than $2.75 and lower. Fuel efficiency is one of the advantages the industry uses to put buyers in trucks, and with lower fuel prices, that advantage goes away.

Predicted Economic Recovery Shape

With a predicted, U-shaped economic recovery, getting back to normal freight volumes and freight rates may take a considerable amount of time.

The U-shaped economic recovery describes a unique recession and recovery pattern, defined by a steep decline in employment, GDP, and industrial output that remains depressed from 12-24 months before complete recovery. In a U-shaped recovery, the recession tumbles along the very bottom of the shape before beginning a sharp incline. The 1973-75 Nixon recession and the S&L crisis recession of 1990-91 are two examples of historical U-shaped economic recovery patterns.

Although the predicted recovery shape is only a prediction, the educated projection extends recovery into 2021.

Can Freight Factoring Help?

Todd Amen, CEO and president of American Truck Business Services (ATBS) warned that consumers out of work for an extended period will halt spending. “Ultimately,” Amen commented, “what happens to the sentiment in America is we close our pocketbooks, we’re going to stop spending money because we need to survive. We’re going to stop shopping except for the essentials. That means freight stops moving.”

As owner-operators prepare for darker days, trucking companies can look for financial assistance to remain afloat until the economy recovers. Freight factoring is one such option. In fact, non-recourse freight factoring can provide the cash flow necessary for your trucking company to recover after the coronavirus pandemic and launch into a profitable future.

Advanced Commercial Capital

At Advanced Commercial Capital, we protect trucking companies from unpaid freight invoices due to fraud, bankruptcy, or delinquency. Our non-recourse factoring provides cash flow for your trucking company with zero unpleasant surprises. We own the risk, not you. If your client fails to pay, we take responsibility for the unpaid invoice.

Trucking companies often look to factoring to increase cash flow during periods of growth – or periods of economic difficulty. To get in touch with our team about factoring for your transportation company today, feel free to reach out at 855.465.4655 or via our online contact form!

Recourse Vs. Non-Recourse Factoring

All small businesses experience both financial plateaus and expansive growth, each phase proving to be a challenge. Small business owners may struggle to stay afloat during scarcity but fight to scale extreme growth during unprecedented expansion. In both cases, business owners may look to financial services for assistance and direction.

Trucking companies looking to tackle new opportunities or struggling to maintain profitability may look to freight factoring for financial assistance. In the content below, we discuss factoring as a financial service, recourse vs non recourse factoring, and how to determine if non recourse freight factoring is right for the long-term growth of your company.

What is Freight Factoring?

Freight factoring is a financial service whereby a factoring organization purchases invoices from a business at a discount from the face value of the invoice. The organization purchasing the invoices is called the “factor,” while the discount amount is coined the “factoring fee.” The factoring company then waits to get paid for the invoice.

How Does Freight Factoring Benefit Trucking Companies?

Freight factoring encourages cash flow. Once the factor purchases the invoice, the trucking company receives enough capital to begin hauling another load. As a result, the trucking company no longer needs to wait for the client to pay the invoice – which are oftentimes delayed – to seize available opportunities and continue company growth. Therefore, with freight factoring, unpaid invoices become immediate cash.

Factoring receivables allows your trucking company to cover daily expenses, such as repairs or fleet maintenance, fuel, or payroll, and plan for long-term success without going into debt or diluting equity ownership in your company.

What is Recourse?

Although subjective in definition between varying organizations, most factoring companies agree that the term “recourse” defines who holds the liability and the action that occurs if the factoring client’s customer (or account debtor) does not pay the debt.

For example, if a freight factoring business purchases a discounted invoice from a trucking company in need of cash and the trucking company’s client never pays the invoice, recourse is the resulting action. According to the recourse factoring agreement, the factoring business is entitled to get paid by the trucker, and the trucking company is required to repurchase the invoice from the factoring company.

Some factoring companies allow recourse to occur by providing another invoice as repayment or simply removing money from a reserve account. Regardless, the trucking company is ultimately held responsible for paying the invoice amount in full.

Benefits of Recourse Factoring

Recourse factoring offers significant benefits for small trucking businesses by providing immediate cash flow from unpaid invoices. This financial solution allows truckers to access working capital without waiting for customer payments, ensuring they can cover expenses such as fuel, maintenance, and payroll. By converting receivables into cash quickly, recourse factoring helps small trucking companies maintain smooth operations and seize new opportunities without the stress of delayed payments. Additionally, it simplifies cash flow management, enabling business owners to focus on growth and customer service

What is Non Recourse Freight Factoring?

Non recourse freight factoring is another popular factoring option. Non recourse factoring is a type of financial assistance where the factor bears all collection risk on purchased invoices. Thus, if the account debtor does not pay his or her invoice, the trucking company is not held responsible to pay the invoice. In fact, the factor cannot demand payment on any purchased invoices if payment is not received due to credit reasons.

Benefits of Non Recourse Factoring

Nonrecourse factoring provides invaluable benefits to businesses by offering immediate cash flow while also protecting against the risk of non-payment. Unlike recourse factoring, where businesses must repay the advance if the customer defaults, nonrecourse factoring shifts this risk to the factoring company. This financial solution ensures that businesses can maintain steady cash flow and cover essential expenses without the burden of potential bad debt. By mitigating credit risk, nonrecourse factoring allows business owners to focus on growth and operations with greater peace of mind.

Non Recourse vs Recourse Factoring

As discussed, the primary difference between non recourse and recourse factoring is the responsibility of the trucking company to pay recourse. The use of reserve accounts is another distinction. Recourse factoring will collect a reserve account in the event that the account debtor does not pay. As mentioned, the factor may withdraw money from the reserve if an invoice is left unpaid.

However, non recourse factoring does not incorporate a reserve because it is not necessary. Alternatively, a refund is not demanded if account debtors cannot pay their bills.

When is Non Recourse Right for Your Trucking Company?

Evaluating whether non recourse freight factoring is right for your trucking company begins with answering a few questions. If your trucking company is currently experiencing one of the following scenarios, non recourse freight factoring may be an ideal course of action for your organization.

Are you a startup trucking company in need of immediate cash?

Non recourse factoring can be an excellent opportunity for startup trucking companies to front the day-to-day expenses of managing a business. Every small business startup is a financial investment, and non recourse factoring is a good avenue to begin purchasing a fleet, hiring drivers, and completing jobs.

Are you an established trucking company experiencing extreme economic difficulty?

In times of economic distress, non recourse factoring can save a trucking company! In some situations, invoice factoring may be the only avenue of cash available to a trucking company, allowing it to stay afloat and prepare in advance for the economy to turn around.

Have you inquired about a traditional bank loan, but your bank is not willing to lend?

The ability to qualify for factoring services is primarily based on the creditworthiness of your customers – not you. Thus, trucking companies have a better chance of receiving financial assistance from a factoring company than a bank, especially if the company has not had enough time to build substantial creditworthiness. Additionally, factoring companies are generally much quicker during setup than applying and getting approved for a bank loan, allowing for immediate cash flow.

Do you spend more time chasing past-due receivables than performing jobs?

Time spent chasing past-due receivables can significantly stunt company growth! When opportunities for expansion present themselves, your company should be positioned to seize the opportunity without feeling burdened by unpaid invoices.

Do you find yourself feeling at-risk of clients paying late or not paying at all?

If you find your company drowning when a client pays late (if at all), non recourse factoring may be the perfect solution to achieve a greater level of business stability. Freed from managing operations at the whim of account debtors, you may be comfortable to invest in business expansion and long-term success.

Find the Right Freight Factoring Program at Advanced Commercial Capital

At Advanced Commercial Capital, our non recourse freight factoring program is one-of-a-kind. We charge no setup fees, offer low, competitive rates, and never force clients into long-term contracts. We are dedicated to providing the highest quality factoring services for as long as the financing solution is best for your trucking company!

If you have any questions about how non recourse freight factoring can benefit your company, please feel free to reach out at 855.465.4655 or via our online contact form today!

Trucking Regulation Changes

To remain current on highway and driver safety, trucking companies must constantly observe any new regulations put in place. At the start of 2020, both trucking and traditional drivers experienced regulatory changes, from identification to drug and alcohol clearinghouse compliance procedures.

However, with the unprecedented effects of the COVID-19 pandemic, a few of the planned regulation adjustments have been postponed. Therefore, it is crucial to ensure you are aware of each change and when they come into effect to prepare your trucking company accordingly. In the content below, we discuss five new trucking regulations to be aware of in 2020.

Real ID

As a national federal regulation, all drivers from every state and territory previously had until Oct. 1, 2020 to transition their driver’s license to a Real ID. This new form of identification complies with new background and security requirements. For any drivers who fail to acquire their Real ID after October 1, 2020, their traditional driver’s license will deny access for commercial aircraft boarding, authorization to nuclear facilities, or entry into federal buildings while on business.

However, as of late March 2020, the Department of Homeland Security extended the deadline one year due to delays brought by the Coronavirus pandemic. As a result, the Real ID deadline is now extended to October 1, 2021.

Revised Entry-Level Driver Training Rules

For those in pursuit of their Class A or Class B Commercial Driver’s License (CDL), this new federal trucking regulation is especially imperative to prevent failure of compliance.

Beginning February 7, 2020, the Federal Motor Carrier Safety Association (FMCSA) instituted a new set of higher standards for professional truck driver licensure. However, training programs have until February 7, 2022 to alter their programs in full compliance with the new regulations in response to the Coronavirus pandemic.

Therefore, to qualify for your Class A or Class B CDL, all aspiring truckers are required to successfully complete an entire training program. The federal Entry-Level Driver Training course now consists of 19 behind-the-wheel assessments (reported by a training provider to the Department of Transportation) in conjunction with passing knowledge of 31 course topics.

Additionally, any existing truckers who intend on becoming a driving instructor must hold a clean motor vehicle record (MVR), a cleared medical certification, and have two or more years of driving experience.

Updated Hours of Service Regulations

At the close of 2019, the FMCSA announced five new changes to the hours-of-service (HOS) federal regulations. As summarized by PrePass, the five key changes proposed by the FMCSA aim to increase driver flexibility while maintaining both their safety and the safety of fellow drivers. The five HOS changes are as follows:

30-Minute Breaks

Drivers may retain the 30-minute break rule. However, to increase driver flexibility, they may tie it to eight hours of driving time, in lieu of eight hours of “on-duty” time. This allows the 30-minute break to be satisfied by a driver using on-duty, idle driving status, as opposed to off-duty.

10 Hours of Off-Duty

In modification of the sleeper-berth exception, this change allows drivers to split their required 10 hours off-duty into one period of at least seven consecutive hours in the sleeper berth and the other period of not less than two consecutive hours, either off-duty or in the sleeper berth. Neither time period would count against the maximum 14-hour driving window. Current HOS rules only allow an eight hour-two hour split, and the shorter rest period is currently counted against the maximum 14-hour driving window.

Off-Duty Breaks

This HOS change allows truck drivers to take a single off-duty break of at least 30 minutes and up to three hours, pausing the driver’s 14-hour driving window, provided the driver takes 10 consecutive hours off-duty at the end of the work shift. This proposal would accommodate disruptions in the driver’s workday, such as weather, traffic and extended detention times.

Driving with Adverse Weather Conditions

Modifying the adverse driving conditions exception, this new regulation extends by two hours the maximum window during which driving is permitted. Currently, truck drivers can extend their 11 hours of driving time to 13 hours under adverse conditions, but the 14-hour driving time window is not extended. The FMCSA believes this will allow drivers to wait out or drive slowly through adverse weather conditions, rather than driving ahead to stay within their allowable driving window.

Electronic Logging Devices (ELDs) and the Short-Haul Exception

This final HOS change adjusts the short-haul exception by lengthening the drivers’ maximum on duty period from 12 to 14 hours and extending the distance limit within which the driver may operate from 100 air miles to 150 air miles. If adopted, all truck drivers would have a maximum 14-hour workday. Drivers utilizing the short-haul exception would still be required to return to their normal work reporting location at the end of each workday. While those drivers are not required to utilize electronic logging devices (ELDs), their employers must continue to maintain time records.

Overtime Trucking Rule Updates

The last federal overtime regulation update took place in 2004. Therefore, to accommodate for growth in pay rates since then, the U.S. Department of Labor instituted a new, overtime trucking rule effective January 1, 2020. As a result of the new regulation in force, any full-time truckers are considered non-exempt and are entitled to receive overtime pay if they make less than $35,568 annually.

Drug and Alcohol Clearinghouse

Despite having only been in effect since January 6, 2020, the FMCSA has already identified nearly 8,000 violations pertaining to substance abuse. The new, drug and alcohol clearinghouse -regulations imposed by the FMCSA require that all motor carriers, fleets, trucking companies, third-party administrators, medical review officers (MROs), and substance abuse professionals report any detected drug and alcohol testing violations.

Through an online database called The Drug and Alcohol Clearinghouse, both the FMCSA and employers can then monitor all violations in every state and national territory in real-time to prevent violators from crossing state lines for work to avoid detection. Additionally, all trucking companies must populate the database with employee Department of Transportation (DOT) substance abuse and verify that the delinquent drivers complete their return-to-duty requirements.

Currently, the FMCSA tracks drug testing violations through urine samples to detect alcohol and drug use, but may lead to hair follicle testing or oral fluids better to identify drug use within the last 90 days. With these new regulations in place, our nation can help improve driver safety while in transit and on the road. Furthermore, with this database in effect nationwide, commercial driving companies can better detect any truck driver applicants who have a history of driving and substance violations.

Help Your Trucking Company Thrive with Advanced Capital Commercial

While balancing the new regulations placed in effect every year, it may be hard to also keep current with your financial and bookkeeping tasks. At Advanced Commercial Capital, we are dedicated to helping your trucking company thrive. When dealing with the high demand for trucked deliveries while remaining in compliance with the new driving and driver regulations, we tailor our solutions to the cash needs of the trucker.

We understand the unique needs and challenges trucking companies face. From paying for fuel to truck maintenance and payroll, it is hard to wait on delinquent customer payments. To get in touch, contact us today at 855.465.4655 or via our online contact form! We look forward to walking beside your company and watching it thrive.

Ways to Prepare Your Trucking Company For A Recession

During times of unprecedented economic turmoil, the chances of corporate endurance or success can appear slim and dismal. As a small or mid-sized trucking company, navigating complex economic distress may feel inundating.

However, survival is possible. In the content below, we offer practical advice on maintaining business health during economic crises from advanced preparation to non-recourse factoring opportunities.

How a Trucking Company Can Survive Economic Turmoil

1. If possible, prepare for economic crises in advance.

Unfortunately, most economic disasters are undetectable from miles away, leaving individuals, businesses, and governments unprepared. However, some level of consistent planning and forethought is required to respond appropriately when unfortunate economic turmoil arrives.
Below are several actionable insights and strategies to help you prepare in advance.

Evaluate your company’s financial health often.

Understanding where your trucking company stands financially will allow you to make informed, quick decisions when needed.

Identify your financial cushion.

Identify areas within your trucking company that may provide a financial cushion should a crisis occur. Do you have room to give, if necessary?

Seek to grow during profitable times.

Expand your services and geographic expertise whenever possible, performing research into stable markets that remain constant during unstable times.

Reduce the possibility of crippling debt.

One simple way to mitigate future expenses is through commercial truck maintenance. Performing regular upkeep on your fleet reduces the possibility of unexpected breakdown and expensive repair. If you own old and unreliable equipment, consider replacing it during positive economic conditions.

Finally, make sure you are aware of current financial standings with all creditors, lenders, and debtors. Check in often.

Analyze the health of your current alliances.

Are relations with your partners, clients, staff, and technicians strong? Developing and fortifying a community of trust and transparency can help your trucking company maintain valuable clients and staff during economic turmoil.

Unfortunately, not every trucking company is aptly prepared for economic distress. The day-to-day challenges of running a business are draining – proactively preparing for disaster is not often on the to-do list. If this is the case, there is still hope for your trucking company in times of unexpected hardship!

2. Save money wherever possible.

Saving money begins with accurately assessing costs. Micro-manage spending. For example, do you know your accurate cost-per-mile? Rudimentary calculation may seem sufficient for times of plenty, but economic distress demands a precise calculation. If utilizing a tracker, be sure to update it every week, per vehicle and driver.

Assess your cost-per-mile.

Assessing your cost-per-mile involves understanding all fixed and variable costs. Your fixed costs may include equipment, collision/comp insurance, permits, health insurance, an office lease, etc. Regardless of how many miles are driven, these costs remain present and reoccurring. Variable costs depend on frequency and volume of usage. These costs include tires, fuel price fluctuations, taxes, lodging, vehicle maintenance, equipment repairs, etc. Comprehending an accurate cost-per-mile involves understanding how overhead costs effect profit.

Implement a pay-for-performance plan.

Consider implementing a pay-for-performance plan for employees. Pay-for-performance plans incentivize drivers to go above and beyond while being appropriately, competitively compensated.

Forbes explains pay-for-performance plans well:

Pay-For-Performance is a way of saying ‘People should get a reasonable salary, and the preponderance of what they can earn should be based on the productivity and results of their own role, along with the overall results of the organization.’ A pay-for-performance plan for your drivers should not be tied to safety or on-time deliveries, that is their job! Driver incentives should be customized to each driver and tied to profit. The driver is the profit center, and based on what that driver produces, above and beyond some standard that you set, the profit is shared with them in some pre-agreed formula.

3. Explore new trucking opportunities.

New opportunities may come in the form of unfamiliar territory. For example, if your trucking business is accustomed to extensive, cross-country trips, yet – in economic turmoil – shorter hauls are more available and lucrative, adapting to the current need and available market. The opposite may be true as well. Regardless of the specific circumstance, adaption during economic distress is often necessary to maintain business health.

4. Take it slow and try to maintain financial stability.

In times of uncertainty and unprecedented distress, our gut response is often panic. As a business owner, panic is often dangerous. Therefore, evaluate your financial situation and ensure your personal finances are in order before making hasty decisions.
One major financial area of evaluation is cash flow. How will you work to keep revenue coming in? Many truck drivers turn to non-recourse freight factoring for survival during times of economic distress.

5. Protect your cash flow with non-recourse factoring.

Trucking companies are more than aware of limited cash flow throughout tough economic conditions. The risk of simply not getting paid increases. Non-recourse factoring can be a trucker’s saving grace during times of uncertain cash flow.

Ultimately, non-recourse freight factoring protects trucking companies from falling into debt if a client does not pay an invoice. When a trucking company is trying to navigate economic turmoil, the risk of clients failing to pay invoices on time or at all can be destructive.

Why choose non-recourse factoring over recourse factoring?

When working with a recourse factoring business, trucking companies are still responsible for the invoice if the client fails to pay in full. Non-recourse factoring completely protects the trucking company from unpaid invoices. Within a non-recourse factoring agreement, the trucking company is not legally responsible to reimburse the bill if the client does not pay – the factoring company accepts the risk.

Prepare for Economic Changes with Advanced Commercial Capital

Advanced Commercial Capital offers a fixed-rate, non-recourse freight factoring program, one of the most popular in the industry. The program is excellent for startup trucking companies – or companies in need of assistance during unprecedented economic distress.

Our non-recourse freight factoring program gives you peace of mind knowing that you will never be responsible to buy back uncollected invoices, and your rate will never change. Furthermore, we do not lock trucking companies into long-term contracts. We will work hard every day to earn your business – and you can choose a different route as needed.

For more information about our non-recourse factoring program, feel free to reach out at 855.465.4655 or via our online contact form.

We look forward to working with you through difficult economic circumstances.