The number of troubled businesses has increased dramatically as a result of the current economic environment. Usually, the problems start when clients start delaying payments. This has a negative impact on cash flow, and if your company does not have a working capital reserve, it can create major problems. The first reaction for most owners tends to be to delay vendor payments as well. That seldom works as a long term solution unfortunately. Before long, like falling dominos, other payments start getting delay and the company gets into deeper trouble.

Most company owners look for business financing – hoping to implement a stop gap solution to the working capital problem. Unfortunately, getting a business loan is very hard for companies that are not in pristine financial condition. The catch 22 is that if the company where in pristine financial condition, it would probably not need a business loan. Most of time times, this situation can be fixed with the right financing. Otherwise, the company risks going out of business.

There is a solution that can help companies who face slow paying clients and who are not in the best financial shape. It solves this particular problem at its source – the slow client payments. The solution is called invoice factoring.

Factoring provides you with a funding advance for your slow paying invoices. It provides you the capital you need to pay suppliers, vendors and employees – on time. The fact is that while your clients are paying invoices more slowly, most of them are still good solid clients. Factoring companies can provide you an advance on your invoices because they consider them to be your best collateral – something most institutional lenders don’t always do. Because of this, invoice factoring can be a good solution for a troubled company that still has a solid roster of clients.

Another advantage of factoring is that is a dynamic form of financing that grows with your business. Since financing is tied to your invoices, it can be used to grow your business and restore its financial health.

Starting or growing a transportation company in the current economic environment is very challenging. At the same time, it can be very profitable, especially for business owners who know how to manage their businesses well. This can be the right time to position your company for growth.

Transportation companies – freight brokers and carriers – operate with very tight cash flows. They have to pay for drivers, fuel, repairs and employees regularly. However, their clients always delay their payments by 30 to 60 days. This puts most companies on shaky ground. It’s impossible for the company to grow, if the owners needs to worry about clients paying on time. And sometimes a single delayed payment can throw the whole company into a tailspin.

So what is the solution? Well, you can try and negotiate a quick pay. If that fails, your other option is to try and secure business financing. However, getting a business loan in this environment is very difficult. Given all the new institutional credit restrictions, business loans are hard to obtain unless your business has pristine credit.

One alternative is to use freight factoring, a specialized for of factoring that is available to the transportation industry. With freight bill factoring in place, you no longer need to worry about when your client payments will come, or whether they offer quick pays. The factoring company gives you an advance for your invoices, which provides the cash flow to run and grow your business. Instead of focusing on how to collect from your clients, you can focus on getting more clients and on running your company more efficiently.

Freight factoring can be relatively easy to obtain and you will find that most factoring companies offer flexible terms to transportation carriers and brokers. And as opposed to institutional financing, most factoring financing lines can be setup very quickly, enabling to reduce or eliminate your cash flow problem very quickly.