How to Get More Financing for Your Commercial Trucking Business
The commercial truck industry works on working capital. You need to be able to afford maintenance and fuel up front for any run, hold out reserves against repairs you couldn’t predict, and make payments for overhead services like insurance. That’s before you budget for new equipment that lets you better serve a wider variety of clients. All of that requires financing because it’s impossible for most companies to keep large enough reserves to manage every cash flow need all the time. In fact, the assumption is that companies will need credit, at least for large purchases like equipment, if not for regular operations.
If you are looking for a way to manage cash flow, there are a few different options. If your company is regularly waiting for invoice payments, factoring could be a great way to make cash flow easier to handle without adding a lot of debt to your credit portfolio. That’s because factoring is basically a loan against your client’s debt, so typically it’s the client who is repaying the advance. This works because the factor takes over payment collections, sending you the remainder after deducting fees and the balance of your advance.
There are options when it comes to factoring. Some lenders will require you to finance all your invoices at once, others will let you pick and choose. Similarly, you can find flat fee factors and those with fees that are staged according to how long the client takes to pay. In the commercial truck industry, this kind of versatility lets you work with different lenders according to your current needs. It also lets you switch off between factoring and other credit resources. Other options can sometimes be a lower fee, and resources like credit lines do not depend on outstanding invoices, so they are good for times when you need capital and you don’t have invoice resources. That’s why you should consider managing your cash flow with multiple instruments.
When you do that, you can reach deeper and get more financing overall, because you can finance your invoices first and then tap your reusable credit lines as needed to augment your working capital further. This lets you take on more business than ever before, providing your company with unprecedented opportunities for expansion. In the commercial truck industry, that can make the difference between being competitive enough to hit your goals and just getting by. Make the most of your finances today.