If your small truck fleet business has just hatched out of a container, then you would have realized that just delivering goods and deducting your fuel expenses and salaries does not equal to profit. There are loads of other related expenses as rent, insurance, bad debt, breakdowns, etc which have to be calculated before you arrive at the correct figure. Your cash flow is also very important, since you will need to have money in your hands, at the time of making payments for fuel, salaries and other expenses.



This is where a good freight factoring company comes in. Freight factoring is, when a factoring company "buys" your freight credit invoice from you and pays you the invoice amount in 2 installments. This first installment could be upto 90% of the invoice value and would be transferred to your account electronically in 24 to 48 hours, and the 2nd installment would be, when your customer pays the invoice amount on the due date, minus the factoring company's 'factoring fees'.

This improves your cash flow immediately, allowing you to pay for your fuel bills, employee's salaries and other expenses, without having to wait for your customer to pay. This will also enable you to take up more deliveries for your regular customers, since you now have cash on hand to take care of your expenses, thereby allowing you to expand your business at a faster rate. Freight factoring companies can also help you in factoring with your brokers, thereby enabling you to deal with reputed brokers who require credit, but can offer you better 'freight-per-mile' rates.

These freight-factoring companies also take care of your payment collections and so enable you to concentrate on other departments, rather than worry about collections all the time. You could even re-direct your bill collection staff to another department helping you to save from hiring new staff. Factoring companies can guide you on the credit ratings of your new customers and send you regular reports on the status of the payments collected and receivables pending from your customers. This will help you in keeping a financial track of your customers. Hence, freight factoring can also help you in avoiding bad debts, which is a very important factor in helping your small truck fleet business remain on the right road to growth.

Many freight-factoring companies even now, do not ask for any long-term contracts, which is beneficial for you. You can opt out of the contract without any major problem, if you are not satisfied with the factoring company's service. You can also consult your factoring company, before taking up any new haul for a new customer or broker regarding their credit worthiness. This can save you from any future late payment fees by nipping the problem, before taking up the haul itself. Hence, the freight factoring company's experience and expertise can be used to your advantage.

Freight factoring is thus, more than a service to your company. It is more like an extension to your business, making it grow and glow at the same time. By taking care of your collections and improving your cash flow at a small charge, freight factoring is truly a boon for the small truck fleet owner.