Most transportation companies  – carriers and brokers alike – will need financing at one time or another to be able to grow past the investment of the original owners. In part, this stems from the fact that the industry is very competitive and margins can be thin making it difficult to build cash reserves.  Also, most shippers pay their freight bills in 30 to 60 days, which combined with minimal cash reserves can create cash flow problems.

Slow revenues and thin margins can create a dangerous combination that leaves transportation companies vulnerable to unpredictable events – such as a slow customer payment, a major equipment breakdown, quick payment demands from drivers or fuel increases. Well capitalized companies can handle these events simply by tapping into their cash reserves. But growing companies, or companies with minimal reserves, run the risk of running into serious problems.

You can certainly minimize these cash flow problems by optimizing how you manage your accounts receivable. For example, you should run credit reports to make sure you only work with shippers that will pay for their loads on a timely basis. Additionally, you should always make sure that all the proper paperwork (e.g. freight bill, bill of lading, etc) is in order. Lastly, you should consider offering discounts in exchange for quick payments. But this strategies do have their limitations.

Although optimizing your invoicing processes will definitely help,  most transportation companies will ultimately need business financing to be able to grow and succeed. Usually, company owners will approach their local institution to try and get a business loan. However, getting a business loan in the transportation industry is very difficult for carriers and nearly impossible for brokers. Furthermore, institutions will usually require that the company present three years of pristine financial records. Also, they will only work with companies that have substantial collateral and whose owners have a solid net worth. Ultimately, few transportation companies will be able to meet this criteria.

However, there is a new alternative way to finance transportation companies that has been gaining traction in recent years. It’s called freight bill factoring. Factoring accelerates the cash that is due to your company from slow paying freight bills. It provides the quick liquidity you need to pay for company expenses – such as drivers, fuel and repairs – without having to worry about the timing of your shippers payments.

Freight bill factoring transactions are usually structured as two advances against your freight bill. The first advance usually averages 90% and is paid as soon as the load is delivered and invoiced for. The second advance, which is the remaining 10% less the fee, is paid once the shipper pays the invoice in full.  The factoring fee varies and is calculated based on the credit quality of your shippers, the size of your advances and the volume of invoices that you factor.

Perhaps one of the most important advantages of using freight factoring to finance your transportation company is that it’s easier to get than most conventional forms of business financing. Since factoring companies are funding your invoices – they view them as your most important collateral.  To qualify, it’s very important that your shippers, who pay your invoices, have very good commercial credit ratings. Also, your invoices must be free of any encumbrances created by tax or legal problems.

Freight bill factoring is also very flexible. Most conventional business financing solutions , like lines of credit or business loans,  have fixed ceilings. Factoring lines tend to have ceilings that are directly tied to your sales. This means that the line can grow along with your company, provided that you are selling to shippers that have solid commercial credit ratings. This makes freight factoring an ideal solution for small and medium sized transportation companies that have substantial growth opportunities but don’t have the cash flow to execute on their growth plans.

Finding the right solution to finance a business has always been a challenge for owners. Most are only aware of conventional products, such as business loans or lines of credit, that are offered by financial institutions.  While this products can work very well, they are usually offered by financial institutions that have conservative lending standards which can make the inaccessible.

Not too long ago, getting a business loan was relatively easy, especially if the business owner had a home that could be used as collateral. Nowadays, business loans are much harder to get. Financial institutions will ask for two to three years worth of financial statements and review them very carefully. Likewise, they will only get involved in lending transactions if the business has substantial collateral and if the owner has a significant net worth.  These criteria all but rule out small business. Because of this, alternative business financing solutions have been on the rise.

Most small companies that look for business financing do so because they have cash flow problems. Usually these happen because the company has to give 30 to 60 day payment terms to their customers but has expenses that need to be paid quickly. In effect, they can’t afford to wait up to 60 days to get paid. One obvious way to fix this problem is to use a line of credit to cover expenses while waiting to get paid. But if a line of credit is not an option, invoice factoring may be the right alternative solution.

Factoring is an form of business financing that accelerates your cash flow due from slow paying customers. It works by using a financial intermediary, called a factoring company, that advances funds  against your slow paying invoices. The factoring company holds the invoices as collateral, while your company gets a cash infusion that can be used to meet your current business expenses. The transaction is settled once your customers pay the invoices , though many companies establish revolving factoring lines that can be used on a regular basis.

Most factoring transactions are structured so that invoices are funded in two stages. The initial advance is provided  as soon as the work is completed and your customer is invoiced. Most initial advances are for 80% of the invoice, but this can vary based on certain conditions. The second advance is provided once the invoice is paid in full and covers the remaining 20%, less the factoring fee.

Factoring fees usually vary based on a few parameters such as the creditworthiness of your customers, the quality of your invoices, how long it takes for your customers to pay and the size of the factoring line.   Generally the factoring fee will be based on a percentage of the invoice.

One of the main advantages of invoice factoring is that it’s easier to obtain than most conventional financing. The most important criteria to qualify is the credit strength of the companies that will pay your invoices – this represents the collateral for the factoring company. Aside from that, your invoices need to be free and clear of any legal or tax encumbrances.  Lawsuits, judgments and tax problems may hinder your company’s ability to  get factoring financing. Most factoring companies will check this information during their due diligence process.

The biggest benefit from factoring is its flexibility. Most factoring lines are not based on fixed amount, but rather are tied to your sales. This means that the invoice factoring line can grow with your business, provided that your sales to are to credit worthy companies. This makes factoring an ideal solution for small and medium sized companies that have good potential that is being hindered by cash flow problems.

The current post recession economy has left a number of companies in deep financial trouble. For some, revenues dropped below expenses, forcing cutbacks. For others, cash flow suffered because customers started paying slowly, starting a chain reaction of missed supplier payments, missed payroll, delayed orders among other problems. If there is one thing that the current economy has provided for small business owners – it’s plenty of opportunities to get into financial trouble.

Many small companies that have run into financial problems could be helped with the right type of business financing. The problem is that companies that have financial problems usually don’t have access to business financing. Financial institutions are very conservative and will only lend money to companies that have solid collateral, impeccable financial statements and a solid track record of profitability. This will rule out most small businesses and almost any company that is in financial trouble. It’s the common catch 22 – where businesses that could benefit from funding don’t have a way to access it.

However, there is a business financing solution that has been gaining popularity with troubled companies – it’s called invoice factoring. Invoice factoring solves one common issue for small companies – cash flow problems created by slow paying customers. It solves this problem by working with a financial intermediary – called a factoring company – that advances you a payment for your invoices and then waits to get paid by your customer. This provides your company with the liquidity it needs to be able to meet its obligations on time without worrying about slow payments.

Factoring financing does have one important limitation though – it can only help companies that have cash flow problems that are created by slow paying customers. It cannot be of much help to companies that have other financial problems – such as low sales.

One of the advantages of factoring financing is that it is easier to qualify for than most conventional financing solutions. Generally, the most important requirement is that your customers need to have good commercial credit. This is important because your invoices are the collateral for the transaciton. Additionally, your company will need to be free of legal and tax problems.

Another important advantage of invoice factoring is that it usually does not have a fixed limit – like a loan or credit line. The factoring line is usually dynamically tied to your revenues, and grows as your business grows – provided you are working with solid customers.

One of the consequences of the recent recession is that companies have become more guarded and conservative with their cash flow. For example, many large companies are conserving cash by paying their invoices more slowly. In turn, this has affected smaller companies who depend on steady predictable cash flow to be able to meet their obligations. Likewise, smaller companies are also doing the same thing and trying to pay their invoices slowly as well. Ultimately, everyone’s cash flow is being affected.

The problem with this is that many small companies live invoice-to-invoice (not unlike paycheck-to-paycheck) and a delay in invoice payments can easily send their finances into a tail spin. And since few small companies have any meaningful cash reserves, a delay may impact their ability to pay suppliers – and more importantly – their ability to meet payroll. Missing payroll can have substantial negative consequences that could ultimately lead to the closure of the business.

Your first line of defense to prevent a cash flow shortage is to build a cash reserve. This is easier said than done since most small businesses don’t have the wherewithal to build a cash reserves. But if you can build a cash reserve, your company will be in a better position to weather the inevitable storms that will hit your cash flow. If building a cash reserve is not an option, then you should consider using a business financing solution that can allow you to cover payroll and other expenses if things get tight.

Invoice factoring is a business financing solution that can be used to correct cash flow issues relatively quickly and without the hassles associated with conventional financing. It works by correcting the problem at the source. It provides you a cash advance for your slow paying invoices, providing the liquidity you need to meet payroll and other important expenses. With an invoice factoring solution you can eliminate the uncertainty of client payments, enabling you to obtain a more predictable cash flow.

One of the advantages of factoring is that the most important thing you need to qualify for this type of financing is solid commercial customers. It’s ok if your customers pay slowly – provided that they pay reliably. Aside from this, your company needs to be free of legal and tax issues. And factoring can be deployed fairly quickly – usually in a week or two.

Another advantage of factoring is that it’s dynamically tied into your sales. This means that it can be increased easily as your sales increase, provided that you are invoicing credit worthy customers. This makes invoice factoring the perfect solution for small companies with good prospects that are hindered by cash flow problems.

Although the economy is recovering from a recession, for many freight carriers and brokers the current environment does not feel like an economic recovery at all. New business is harder to come by and cash flow pressures have increased as customers are paying their invoices slowly. Having tight cash flows is a very common problem in the industry, and leaves companies in a precarious position. This is because small carriers have many obligations – such as trucks, fuel and drivers – that need to be paid periodically and few can afford to wait for slow paying customers.

One way to solve this problem is to start requesting faster customer payments. This can sometimes work, especially if you offer your shippers a discount for paying early. Offering 2% for a payment in 10 days or less is quite common . The problem with this strategy is that you are still at the mercy of your customer who may – or may not – pay quickly.

A second way to solve this problem is to get conventional business financing such as a loan or line of credit. While a line of credit would certainly help address this cash flow problem, they are very difficult to obtain in this environment. Banks are notoriously risk averse and will usually demand strong collateral, a long track record and impeccable financial statements before providing financing. The problem is that few, if any, small carriers (or brokers) will meet this criteria.

A third alternative to solve this problem is to use freight bill factoring, a form of financing that can be used to speed up payments from slow paying shippers. It works by using a third party company, called a factoring company, that provides a cash advance for your slow paying invoices. The cash advance can be used by your company to cover expenses and take on new opportunities. The transaction closes once the customer pays the invoice in full. It’s common for carriers and brokers to factor invoices on a regular basis, thus ensuring smooth cash flow.

One advantage of freight factoring over other solutions is that it’s easier to obtain. The most important requirement to qualify is that your shippers need to have good commercial credit. This is important because their invoice is the collateral that the factoring company is financing. Aside from this, your company needs to be properly established and be free of legal and tax problems. Another advantage of invoice factoring lines is that they can be implemented very quickly. It’s common for a line to be up and running within a week or two.

Perhaps the most important feature of factoring is that it’s dynamically tied to your revenues. This means that the line can increase easily as your sales increase – provided your shippers have high quality credit. This makes freight factoring an ideal solution for small and medium sized freight companies with growth potential whose main problem is that their customers pay slowly.

Slow paying customers can drain your company’s resources and create a serious drag on your company’s cash flow. In an ideal world, the best way to avoid slow paying customers is not to sign them on in the first place. But in reality things are never that simple, and especially nowadays, even large corporations also pay their invoices slowly. It’s just how things work in the current economy so it helps to have a plan to del with slow paying clients.

With this in mind – what is the best way to deal with slow paying customers? In reality, there is no best way. Rather, there are a number of steps you can take to make sure you get good customers with solid payment records. If you follow these steps diligently you will minimize the chances that you will have problems from slow paying customers.

There are two things that you can before singing on a customer that will reduce the likelihood of having payment problems. First, when you work with clients you should always have an attorney written contract that outlines all the critical points of the sale, including the payment terms and the product/service acceptance criteria. This is critical because it puts all expectations in writing and gives both parties an opportunity to measure performance. Second, you should only extend payment terms to commercial customers that have a solid payment track record. To do this you will need to check your client’s commercial credit or references. Dun & Bradstreet and Experian both produce well respected business credit reports that are available online.

The next step is to manage your receivables properly. There should be a dedicated person that calls the customer shortly after the sale to make sure that they are happy with the product or service. This will help you identify potential disputes so you can resolve them quickly. And If the invoice remains unpaid after the due date, be sure to call the customer promptly to check on the status. However, be mindful of how often you call the customer since calling too often can cause problems. Lastly, you should always be respectful, polite and professional with all customer interactions.

However, there are times when you follow all the right steps and customers still pay slowly. This can create a cash flow problem for your company. In that case, you should consider using invoice factoring to accelerate the payment of your invoices. Factoring is a form of business financing in which a funding company, called a factoring company, advances funds against your slow paying invoices from credit worthy commercial customers. This provides you the needed funds to operate your business and relieves the pressures created by slow paying customers.

One of the advantages of factoring is that it’s much easier – and faster – to obtain than conventional business financing. Since factoring companies use your invoices as collateral – it’s critical that you work with credit worthy customers. Aside from this, your company should be free of legal and tax problems. Most factoring lines can be implemented in a couple weeks – which is comparatively fast. these Teatures make invoice factoring an ideal solution for growing firms the have good, but slow paying, customers.

At one time or another, most businesses will run into cash flow problems. This happens even to the best managed businesses. It’s not unusual for a business owner to be so focused in managing operations or servicing clients that they lose sight of their cash flow, until it becomes a problem. Then, the business owners go in a frantic search for the solution. If they have business financing, they tap their line of credit. If they don’t have financing, they go to their financial institution and try to get a quick business loan. And that is usually where they run into a wall.

Most financial institutions provide financing based on your company’s collateral, your assets, the strength of your financial statements and your track record. Few companies with cash flow problems can show solid financial statements. Furthermore, most institutions can’t provide business financing quickly. Most require a month or two to complete the process. If your company needs emergency financing, waiting a month can spell disaster. However, ff you have a specific type of cash flow problem, there is an alternative that is usually easier (and quicker) to obtain than a business loan – it’s called invoice factoring.

Most companies that that sell commercial goods or services have to give payment terms to their clients. This means that they have to wait up to 60 days to get paid for their services. On the other hand, they also have to cover their current business expenses regularly. This creates a timing gap between income and expenses. Companies manage this timing gap by paying for expenses out of their reserves, while waiting for customers to pay. Sometimes due to circumstances, the gap becomes unmanageable. And that is where companies run into problems.

The simplest solution is to close the timing gap by asking customers to pay quickly . This can work if you offer them an incentive, such as a 2% discount for quick payments. But ultimately, you will end up at the mercy of your customers payment habits. A better solution may be to factor your invoices.

Factoring provides your company with a quick payment for its invoices by using a financial intermediary. The financial intermediary buys your invoices for an upfront payment and then waits until your customer pays. This provides your company with the needed liquidity to operate and expand. The factoring company charges a small fee for this service.

Invoice factoring is relatively easy to obtain and can be setup fairly quickly – usually in a week or two. The most important qualification requirement is the credit quality of your customers – factoring companies can only finance your invoices to credit worthy customers. Aside from that, your company need to be free of liens and legal encumbrances. Invoice factoring an ideal solution for companies that need emergency financing due to cash flow problems.

Although the natural gas and petroleum industry is doing very well, finding business financing for pipeline maintenance companies that serve this industry remains very challenging. Many are small or medium sized family owned companies that can have a difficult time qualifying for conventional bank financing because of their size. However, finding a source of financing is critical for growth, because pipeline maintenance companies are very cash intensive.

Most pipeline installation and maintenance companies run into cash flow problems because their customers pay their invoices in 30 to 60 days. However the pipeline maintenance company needs to pay a number of expenses much sooner than that – payroll needs to be met, rent needs to be paid monthly and suppliers need to be paid quickly. This creates a gap in the timing between revenues and expenses. And this gap can get many companies into trouble since they need to use their own cash reserves to cover expenses while waiting to get paid by clients. Ultimately, the company runs the risk of exhausting their cash reserves. At the very least, this will limit growth. If left unchecked, it could send the company into a financial tail spin.

There are three ways to handle and shorten the timing gap between revenues and expenses. You can accelerate your revenues by asking your customers to pay their invoices quickly. You will need to give your customers an incentive if you want them to pay sooner – a common incentive is to give them a 2% discount for if they pay an invoice within 10 days. A second approach is delay your expenses by paying your suppliers in 30 to 60 days. This may work for larger pipeline maintenance companies with good credit, but may not work for smaller companies. Most companies usually try to improve their cash flow by using a combination of these two strategies. While these two strategies can work, they ultimately leave you at the mercy of your clients and suppliers, who could change their minds at any time.

A third approach is to accelerate your revenues using invoice factoring. This strategy accelerates your revenues by using an financial intermediary, called a factoring company, between your company and your customers. The factoring company purchases your invoices for completed work (at a discount) and pays you upfront. This accelerates your cash flow and puts you in a better position to manage and grow your company. The factoring company then waits until your customer pays the invoice, at which time the transaction is settled.

One major advantage of factoring is that it’s easier to obtain than conventional business loans. Factoring companies consider your invoices to be your most important collateral and can finance them, provided they come from reputable and credit worthy customers. Because of this, factoring is accessible to small and medium sized companies that would not traditionally qualify for bank financing. Factoring can be a valuable tool for companies whose biggest challenge is that they need their customers to pay sooner.

Many business owners complain that access to business funding is the biggest limitation that they have to growing their businesses. It’s a sign of our current economic times, but companies are turning business opportunities away because they do not have the financial resources to pursue them. Many believe that a business loan or line of credit would solve their problems. However, it’s very difficult to obtain business financing in the current environment. Most institutions are reluctant to provide business loans to clients that cannot show substantial assets, sizeable collateral and strong financial statements. Few small companies can meet these criteria, so conventional debt financing in general is only available to companies that are in great financial health. There is an alternative though, one that lets you finance your company without using debt financing.

Having cash flow problems is one of the biggest reasons why many growing companies run into problems. For many, these problems start because they give their customer up to 60 days to pay their invoices. This common practice forces companies to use their own resources to cover expenses while waiting for customers to pay. This can lead to problems when the company runs low on cash or when customers start taking longer to pay. At the very least, it will prevent growth. At its worst and if not managed properly, it can put your company out of business. There are two ways to solve this problem without using a business loan. One way is to give your customers an incentive to pay quickly. A common practice is to offer then a 2% discount if they pay in 10 days. The problem with this strategy is that you are still ultimately at the mercy of your customers. The second alternative is to use an invoice factoring facility, a tool that allows you to obtain quick payments from your creditworthy customers.

Factoring accelerates your customer payments by using a financial intermediary, called a factoring company, that buys your invoices at a small discount and pays you upfront for them. This eliminates the problem of having to wait for customer payments and strengthens your cash flow. When managed properly, you can use factoring as a platform to grow your company without incurring in conventional debt. An important feature of factoring is that most transactions are structured as invoice purchases rather than as business loans.

The factoring company’s fee, commonly referred to as a discount, varies and it’s based on the size of your invoices, your sales volume and the credit quality of your invoices. As a matter of fact, the credit quality of your invoices is the most important criteria for qualification. This enables small companies, whose biggest asset is a list of strong clients, to use factoring to their advantage.

Most small and medium sized businesses that sell to commercial clients develop cash flow problems sooner or later. Most of these problems stem from the fact that companies have to deliver their products/services immediately but have to wait up to 60 days for customers to pay their invoices. On the other hand, the company still needs to pay many expenses quickly. Payroll must be met. Suppliers and rent have to be paid on time. This situation creates a timing gap between revenues and expenses, which can create serious cash flow problems. Unfortunately, business owners are usually caught in a catch 22. Large credit worthy customers will take their business elsewhere if you don’t give them up to 60 days to pay.

There are three ways to reduce the timing gap and improve the cash flow of your business. One alternative is to accelerate your revenue by asking customers to pay sooner. Many companies are willing to offer a 2% discount on their invoices to customers that pay in 10 days or less. Another strategy is to delay your expenses. For example, ask your suppliers to give you 30 to 60 day payment terms. However, to get 30 to 60 days payment terms, your company needs to have a good commercial credit. Using these two strategies will allow you to better match your revenues and expenses. The problem is that ultimately, you are leaving the fate of your company at the mercy of its clients and vendors.

There is a third alternative to solve this problem. You can accelerate your revenues using an invoice factoring facility. Factoring allows you to finance your invoices from large credit worthy customers – basically leveraging their credit strength to get financing for your own company.

Factoring works by using a financial intermediary, called a factoring company, that buys your invoices and provides an upfront payment. Your company gets immediate funding that can be used to cover current expenses or invest in growth opportunities . Once the factoring company buys the invoice from your company, they hold it until your customer pays. Once your customer pays the invoice, the transaction is settled. The factoring company charges a small fee for this service.

Obtaining factoring financing is relatively easy – your company needs to be free of problems and it needs to work with credit worthy customers. And, the financing line is directly tied to your sales, enabling it to grow dynamically as your sales grow.

Factoring is an ideal business financing solution for companies whose biggest challenge is that they can’t afford to wait 60 days to get paid by customers.

Although the recession officially ended a few years ago, the economy is still reeling from the economic after-shocks of the credit bubble. One of the most difficult challenges that small business owners are facing is the lack of conventional business financing options – namely business loans and lines of credit. Most lending institutions have substantial financial problems and are unable (or unwilling) to extend loans to small businesses, unless they have substantial collateral.

Businesses owners, on the other hand, have their own problems because cash flow is tight. Customers that used to pay in 15 or 30 days are now taking up to 60 days to pays their invoices. However, small businesses still have to pay employees and vendors on a timely basis. This creates problems, forcing managers to juggle payments between vendors. To complicate matters, many small businesses are turning away new orders simply because they are unsure if their cash flow will allow them to service the client properly. This create a vicious cycle that puts business owners in a catch 22.

There is one way to break this vicious cycle, and that is to use business financing to strengthen the company’s cash flow, enabling the business to take on new orders and grow. And since few institutions are offering financing, the only option is to use alternative financing. One product that has been gaining traction in the past few years is invoice factoring.

Invoice factoring is designed to solve cash flow problems that are created by slow paying customers. It accelerates the receipt of cash, providing the liquidity you need to cover current business expenses and grow the business. By eliminating the conventional net 60 day wait for payment, your company is able to make business decisions based on the potential of a customer, rather than their payment habits.

Factoring works by using a financial intermediary between your company and your customer. The intermediary, called a factoring company, buys your invoices and pays for them by advancing funds to your company. This provides your company with the needed liquidity to operate and grow. The transaction is then settled once your customer pays the invoice in full, usually 30 to 60 days later.

As opposed to other forms of financing, accounts receivable factoring is widely available and relatively easy to obtain. This two biggest requirements are to work with credit worthy customers and to be free of major problems, like liens and judgments. Customer credit worthiness is particularly important because the whole premise of factoring involves leveraging your customers commercial credit to your own advantage. This makes invoice factoring an ideal solution for small and midsized companies whose biggest challenge is that they can’t afford to wait 60 days for their customers to pay.

Most businesses are still feeling the effects of the past recession in one way or another. The most affected businesses are finding themselves with more liabilities that assets, leaving them with a negative equity situation. Unless handled correctly, this situation can easily spiral into a vicious cycle that ends with the company declaring bankruptcy or shutting down.

Most companies with negative equity also have cash flow problems. Most commonly, these appear when the customers start demanding longer payment terms. Instead of paying invoices in net 30 days, they start paying them in net 60 days. This creates a liquidity problem that forces the company to start juggling vendor payments and other expenses while waiting to be paid. It also limits the ability of the company to take new orders. Before long, the company goes into a tail spin.

Many times, this cash flow problem can be corrected with business financing, enabling management to turn the company around. And here lies the problem. Getting business funding while having negative equity is nearly impossible. You won’t be able to find a line of credit or business loan. And if you already have financing, it’s unlikely that your institution will increase the line. After all, if you have negative equity, your company has no collateral. And institutions don’t lend without collateral.

There is an alternative however. If you biggest problem is that you have cash flow problems due to slow paying clients, factoring financing may be the right solution to help you turn your company around. Invoice factoring accelerates your client payments by using a financial intermediary between your company and your customer. The factoring company, as the intermediary is called, advances you funds for your invoices as hold them until your customer pays. This increases your liquidity, improving your ability to pay vendors and take new orders.

One of the advantages of invoice factoring is that it’s easier to obtain than conventional financing. The collateral that factoring companies are most interested on are your invoices from credit worthy customers. Most factoring companies are comfortable holding only that as collateral. Aside from that, your company will need to show how it plans to turn around its current situation.

If you currently have another business financing solution in place (e.g a business loan), you will probably need your lenders cooperation to add and integrate factoring into your company. Turning around a company that has negative equity is very challenging. You should consider hiring a qualified financial professional to help you with this situation.

Trucking companies tend to be cash intensive businesses. To grow the company beyond the proverbial one person one truck business you will need access to capital or business financing. The big challenge is finding – and obtaining – business financing in this environment. Even though the recession ended a long while back, we remain in a small business credit crunch. Most financial institutions are unwilling – or unable due to their financial problems – to provide business loans to small transportation companies.

The biggest problem for most trucking companies and brokerages is cash flow. This problem stems from the fact that most trucking companies and brokerages have immediate expenses but delayed revenues. In other words, they need to pay for drivers, repairs and fuel quickly. On the other hand, customers pay their invoices 30 to 60 days after service. This time gap between expenses and income forces trucking companies to dip into reserves to cover current expenses. And therein lies the problem since few companies have the required capital reserves to cover current expenses for up to 60 days, while growing the company at the same time.

The obvious solution to the problem is to reduce the time it takes for customers to pay you. This is easier said than done since customers like being able to pay in up to 60 days. It helps them with their own cash flow. One strategy is to offer the customer an incentive to pay quickly, such as a discount if they pay within 10 days. It’s a good strategy, if your customers are willing to work with you. You will still be at the mercy of customers who may change their mind and opt out of the discount (and early payment). For many, the better solution is to use business financing.

There is one business financing solution that solves this cash flow problem and has remained available during the credit crunch. It’s called freight bill factoring. Freight bill factoring allows you to have the equivalent of a quick pay on your freight bills, without having to worry about convincing your customers to pay quickly. So instead of waiting 60 days to get paid, you can get paid in a few days. This strengthens your cash flow and helps ensure you have the funds to meet current expenses and take on new loads.

Freight factoring works by using a financial intermediary called a factoring company. The factoring company advances funds based on your freight bills and holds the invoices until your customer pays in full. Once your customers pay, the transaction is settled. The factoring company’s main collateral is the creditworthiness of the invoices it finances. This makes it a good solution for small carriers and brokerages whose biggest (or only) asset is a strong list of customers can benefit from this solution.

Factoring is an ideal solution for carriers and brokerages whose biggest challenge is not being able to wait 60 days for clients to pay their invoices.

Out of challenge comes opportunity. The real estate bust has forced a number of banks , trusts and real estate companies to foreclose on properties. Basically, they were transformed from being mortgage holders into being property owners, at least until they could sell the properties in the open market. This created a serious challenge for banks since they do not have the staff or expertise to maintain these properties. And with this, a new opportunity was born for property preservation companies.

Any home owner knows that houses and apartments need a lot of care. It’s seems that almost every week the yard needs work or something needs to be fixed, patched or painted. To make matters more complicated, few foreclosed homes are returned in good condition. Far from it. Most are full of debris, in poor shape and in need of substantial repair work. This is where property preservation companies come in. They are the first ones to come into the foreclose property and restore it into good shape, making the property livable again. Then, once the property is restored, they work maintain it to ensure that it remains in good shape.

By their very nature, property preservation companies are labor intensive. They need a staff of people who are proficient at fixing things. They also constant need of supplies in order fix homes. Their biggest problem is that most banking customers pay their invoices in 30 to 60 days, which creates a cash flow problem. The property preservation company needs to cover all its expenses while waiting to be paid. This can be very challenging since few companies are well capitalized and can’t afford to wait. Furthermore, it’s hard to grow a company if you have to keep a large reserve of cash just to cover current expenses.

One way to solve this problem is to use business financing. However, few companies can qualify for conventional business loans, especially since banks and other financial institutions still have some reluctance to lend. One alternative that has been gaining popularity is called invoice factoring. This solution reduces the time it takes your company to receive payment down to 2 days. Factoring invoices provides your company with predictable cash flow and eliminates the guesswork of when you invoice will be paid.

The most common way to set up a factoring transaction is to have the factoring company act as an intermediary between your company and your customer. Your company sells the invoice to the factoring company, who pays for it immediately. The transaction concludes once your customer pays the invoice in full. At that time, the factoring company settles the transaction.

Most factoring companies purchase invoices in two installments. The first installment is called the advance and is given to you at time of purchase. Most advances are for 80% of the gross value of the invoice. The second installment is called the rebate and is provided to your company once the customer actually pays for the invoice. The rebate will be for the remaining 20%, less any financing fees.

The most important requirement to qualify for invoice factoring is to have credit worthy commercial customers. This is because their invoices are the collateral that the factoring company is purchasing. Property preservation companies have a nice advantage here since most banks are still reliable payers. Additionally, your company needs to be free of liens , judgments and legal problems.

Invoice factoring is a form of business financing that has been gaining a lot of notoriety in recent years. It is a specialized form of business financing that is designed to help companies that offer net 30 to net 60 terms to their customers, but can’t afford to wait that long to get paid. Factoring invoices solves this problem by advancing funds to companies based on their slow paying invoices. This improves their cash flow and helps them stabilize operations, allowing them to grow.

Most factoring transactions are structured as the purchase of an invoice by a factoring company. The purchase is done in two installments. The first installment is called the advance, and is provided as soon as you sell the invoice to the factoring company. The percentage that is advanced is based on your industry, your track record, the payment record of your customer and market risk conditions. Most advances average 80% of the invoice. However, transportation companies using freight factoring can get advances as high as 90%. Likewise, staffing companies can get factoring advances that go as high as 90%.

The second installment, called the factoring rebate, is paid to you once the customer pays the invoice in full. The rebate will include the remaining amount that was not advanced, less any fees. For example, if the advance was 80%, the rebate will be 20%, less any factoring fees.

When a factoring company purchases an invoice from your company, it can do so with recourse or without recourse. In a recourse factoring transaction , the factoring company has the right to sell back to you any invoices that have not been paid within 90 days, regardless of the reason for nonpayment. A non recourse transaction is a little bit different. The factoring company will absorb the loss of a non paid invoice if (and only if) your customer does not pay the invoice due to a declared insolvency (such as a bankruptcy) during the purchase period. Each factoring company engineers transactions in their own way, so you should familiarize yourself with the terms of your contract.

One very important aspect of a factoring transaction is the notice of assignment. Before you start factoring invoices for a particular customer, the factoring company will need to setup the customer. This is usually a fairly quick process where the factoring company checks your customers commercial credit, and then notifies them that their invoices will be factored. The notification letter, commonly referred to as a notice of assignment, informs your customer that you are working with a factoring company, who is helping you with your receivables. It also contains a new payment address. Many times the payment can continue to be made in your company’s name, provided it goes to the new address. The notice of assignment is fairly standard in the factoring industry but each factoring company has its own version of it.

Although factoring transactions appear to have many moving parts, they are fairly simple to implement and can be easily integrated into most companies. One of its most important benefits is that factoring is flexible. The line is dynamic and tied directly to your sales. You can easily grow your financing – as necessary – provided you sell good products or services to a diverse number of credit worthy customers.

The U.S. government buys billions of dollars worth of products and services from commercial companies every year. This has held true even during the credit crunch and recession of the past few years, making government sales one of the more attractive opportunities during the past few years. In response to this trend, a number of companies have started or grown their government sales departments.

Generally, government suppliers are either selling products or services. The financial challenges that these two types of suppliers face are different. Product suppliers need capital to purchase goods, that can then be resold to the government to fulfill their purchase order. Service suppliers, on the other hand, need to cope with the fact that government invoices can take up to 45 days to pay after delivery of service, which affects cash flow.

Unless the company is well capitalized, government suppliers will need business financing to be able to meet their obligations and grow their companies. One alternative is to use a business loan to improve cash flow. The challenge is that business loans are difficult to obtain in the current financing environment. Most financial institutions will require solid financial statements, showing at least a couple years of profitable operations. Additionally, the company will need to have substantial collateral. Few companies can meet this criteria.

There are two alternative forms of financing government transactions that have been gaining traction in the past couple years. They are purchase order financing and factoring financing. These two financial tools are available to most government suppliers.

Purchase order funding solves a common problem for government suppliers that sell products – how to pay your suppliers so that you can fulfill your government purchase order. It solves this problem by paying your suppliers on your behalf, and then settling the transaction with your company once the government pays for the goods.

Factoring, on the other hand, solves a different problem. Most government service providers need to wait up to 45 days to get paid for their services. But few can afford to wait that long because they have obligations to meet, such as payroll and rent. Invoice factoring provides an advance against the government invoice, providing the liquidity your company needs to meet its obligations. This transaction is also settled once the government pays the invoice.

Both of these alternatives are easier to obtain than conventional financing and have the flexibility to grow with your business. To qualify, your company must have viable government purchase orders, decent margins and be free to liens and judgments.

One of the more troubling by-products of the recent credit crunch is that many companies implemented immediate measures to conserve cash. One of those measures was increasing how long they take to pay invoices. In the past, most commercial transactions were paid on net 30 terms. That meant that the customer had 30 days to pay their invoice. Now, most customers are paying their invoices in 45 to 60 days. Some are taking as long as 90 days to pay. This has put small and medium sized companies at a disadvantage because few can afford to wait that long to get paid and may need to be paid sooner to be able to meet obligations.

One way to protect your company against this situation is to start building a cash cushion that can be used to cover operational expenses while waiting to be paid. Another alternative is to offer incentives, such as discounts, to customers that agree to pay quickly. Offering a 2% discount for a payment in 10 days is a common practice that can be used to enhance cash flow.

Another alternative is to use a business financing tool called factoring in order to quickly monetize your slow paying invoices. Invoice factoring involves using a financial intermediary between your company and your customer. You sell your invoice to the factoring company, who advances you funds. The factoring company then holds the invoice until maturity and settles the transaction when the customer pays in full.

Most factoring financing transactions are structured as the purchase of an invoice, which is an asset, payable in two installments. The first installment is called the advance and is about 80% of the gross value of the invoice. The second installment, called the rebate, covers the remaining 20% (less a service fee) and is paid once your customer pays the invoice in full.

An important advantage of factoring financing is that is more accessible than other forms of financing. Most factoring companies don’t require that clients have substantial assets. The most important requirement is that the client must do business with credit worthy customers. This feature makes factoring an easily accessible solution for small and midsized companies.

Another important feature of factoring is that it can be deployed quickly. While most conventional business financing programs take a couple months to set up, most factoring plans can be deployed in a week or two.

One of the biggest advantages of factoring is that it can monetize slow paying invoices. This makes it an ideal solution for companies that can’t afford to wait up to 60 days to get paid by customers.

Now that the recession is over and the economy is growing again, transportation companies are finally seeing some growth themselves. However, conditions are more difficult than they were before and most shippers are paying their freight bills slowly. Invoices that used to pay in 15 to 30 days are taking 45 to 60 days to pay. This creates a cash flow problems because few carriers have the resources to pay their operating expenses while waiting 45 to 60 days to get paid. If managed incorrectly, this situation can lead to three possible outcomes: the carrier stops growing, the carrier gets into trouble with operational costs, or in the worst case scenario, the carrier goes out of business.

If you don’t want to get business financing, your only two options are to either restrict growth or to convince shippers to pay sooner. Actually, it’s not unusual for some shippers to offer a quick payment option if you give them an incentive discount, such as 2% off if they pay in 10 days or less. This strategy can work well but it will leave you at the mercy of your shippers. Your company could run into problems again if they decide to stop taking the early payment discount.

Another alternative is to address the cash flow problem directly using freight bill factoring. This financial product provides the equivalent of a quick pay by using an intermediary company called a factoring company, which provides a quick payment for your freight bill and holds it until your shipper pays. Using freight factoring can improve your cash flow substantially by reducing the amount of time you wait to get paid for your freight bills.

Most freight factoring transactions are done in two installments. Your first installment of 90% of the invoice is provided to you as soon as you send the invoice to the factoring company. The remaining 10%, less a service fee, is paid as a second installment once the invoice is paid in full.

One feature that makes factoring an attractive option is that it’s easier to obtain than most conventional business financing products. The most important requirement is that your shippers must have a good commercial credit rating, since factoring companies advance funds based on your shippers ability to pay. Since solid invoices from good shippers are the factoring company’s preferred collateral, small and growing companies that have good clients can usually qualify for this solution.

Freight factoring can be an ideal solution for transportation carriers whose main issue is that they can’t afford to wait for their clients to pay because they need the funds sooner.

One of the most challenging situations a business owner can run into is having a lot of invoices that will be paid in 60 days, a lot of expenses that need to be paid now, and not enough cash in the bank to pay the bills. This is a very common situation for small and midsized businesses that have to give their clients 30 to pay their invoices. Sooner or later, they run into cash flow problems – especially if the company is growing.

In this case, the biggest risk is not having enough funds in the bank to cover payroll. A business owner can delay paying their vendors, but not paying employees is usually an unacceptable option. Usually, missing payroll can signal the beginning of the end since few companies can recover from that.

One solution is to accelerate customer payments. A way accomplish this is to offer customers a discount if they pay quickly. A common rule is to offer a 2% discount if the customer pays in 10 days or less. This strategy is well know and usually works and will help you build a cash reserve. The problem is that this it will leave you at the mercy of your customers who may chose to opt out of the discount at any time.

Many business owners require both quick payments and predictable cash flow. In those cases, the best solution can be to use business financing to cover the cash flow gap. A solution that has been gaining traction in the past years is invoice factoring. Factoring can help cash flow by reducing the length of time it takes you to get paid for your invoice from 30 days to just a couple of days. It works by introducing an intermediary called a factoring company who advances your company funds against your invoices. The factoring company holds the invoice and then waits until your customer pays ay which time the transaction is settled.

Most factoring transactions as structured as two payments. The first payment, usually 80% of the gross invoice value, is given as soon as the invoice is sent to the factoring company. The remaining 20%, less a service fee, is paid as a second installment once the customer pays the invoice. The service fee will vary and be based on the factoring volume and credit quality of your invoices.

One of the advantages of factoring is that it’s easier to obtain that other forms of funding. Most factoring companies look for clients that have customers with good commercial credit ratings. A small company whose biggest asset is a roaster of good customers would be a good candidate for this type of financing.

Factoring is a great solution for companies whose biggest problem is that they can’t afford to wait 30 to 60 days to get paid by their clients.

Most companies experience cash shortages at one time or another. This article will explain how to address a common problem that causes shortages and will also suggest some strategies to del with them. However, this article should not replace the advice of a qualified professional. If your company has serious cash flow problems, you should consider speaking to a financial specialist immediately because waiting seldom helps.

Let’s look at the most common cash flow problem. In corporate sales it’s common to give customers 30 days to pay. Thanks to the economy, most customers have taken longer to pay their invoices. Some can take as long as 60 days to pay. This leaves companies waiting up to two months for payment. In the meantime, the company needs to cover it’s expenses regularly. You need to pay rent, vendors and employees. So these payments come out of your reserves, until the invoices pay. The problems start when your reserves dwindle due to growth or slow paying customers.

There are two ways to protect your reserves. One way is to delay expenses so that they come close to matching your invoice payment cycle. The other one is to accelerate invoice payments. Ideally, you want to take both approaches to achieve the most optimal solution.

The most common way to delay expenses is to speak to your own vendors and seek 30 to 60 day terms yourself. If you have been a good client to them, many will be happy to oblige in order to keep your business. However, if you renegotiate payment terms, be sure that you can meet the payments, otherwise you risk losing your vendors. One thing you should avoid at all costs is missing payroll or not paying taxes. If you are at risk of missing payroll, seek the help of an advisor as it’s a sure sign your company is in serious trouble.

There are a couple ways you can accelerate your invoice payment cycle. One is to speak to customers and offer them a discount if they pay quickly. It’s a common industry practice to offer a 2% discount to customers that pay in 10 days or less. If that approach is not sufficient, you should consider factoring your invoices. Invoice factoring accelerates your revenues by using a financial intermediary who advances you funds against your slow paying invoices. The factoring company holds the invoice until maturity and settles the transaction with your company once the customer pays the invoice in full. The factoring fee is based on the factored volume, the credit quality of the invoices and other variables.

One advantage of factoring is that it’s easier to obtain than conventional business financing. The impost important requirement to qualify is to have customers with good commercial credit ratings. It also works well for company whose assets are limited to good quality invoices from credit worthy customers.

Most cash flow shortages require a comprehensive approach of managing both expenses and income in only to ensure the company has sufficient liquidity to cover obligations. Factoring is a tool that can be used to help in this effort.

Although the recession has been technically over for a while, finding business financing remains almost as challenging as it was during the worst part of it. This is due to a combination of lending institutions being in bad financial shape and lenders being more conservative in their lending. In the end, they only provide business loans to companies that are in pristine shape. That means that companies need to have two to three years of positive financial statements, have strong cash flows, strong assets and a seasoned management team. However, few companies have survived the recession unscathed and most can’t meet these requirements. If a company is viable but has a less than perfect past – what are their options?

Most companies that look for financing tend to have a similar problem – poor cash flow. This problem starts (or worsens) when customers start paying their invoices late or asking for longer payment terms. Invoices that used to be paid in 15 to 20 days, now get paid in 30 to 40 days. Some customers may take up to 60 days to pay an invoice. In the meantime, the company still needs to cover all their current expenses.

This can put a company in a precarious position, especially if it does not have strong cash reserves. They risk missing a critical supplier payment or worse, missing payroll. One way to fix this problem without using a business loan is to use invoice factoring.

Invoice factoring provides an advance for slow paying invoices. This provides the company with the necessary funds to meet supplier payments and other expenses. More important, it stabilizes cash flow by providing predictable invoice payments, allowing the company owner to focus on growing the business.

When cash flow is tight, owners fret over taking on new business and adding customers because they are unsure if they will be able to cover expenses until the client pays. Invoice factoring solves this problem – allowing the business to take on new clients and grow.

Integrating factoring to a company is fairly easy. Usually, the factoring company will give you an advance of up to 85% on your invoice as soon as the work is completed. The remaining funds, less the fee, are rebated when your customer actually pays.

Qualifying for factoring is much easier than qualifying for other types of financing. The most important requirement to qualify is to do business with customers that have good commercial credit. Aside from that, your company needs to be free of liens, judgments and tax problems.

The transportation industry was very affected by the recession that finished in 2009. Although the recession has formally ended, the credit crunch that started with the recession is still ongoing and will remain so for the foreseeable future. Although some banks are lending more, for the most part, getting business financing remains very difficult. This is especially true for transportation companies and not likely to change in the near future because a number of lending institutions are still in trouble themselves.

To qualify for bank or institutional financing the carrier needs to show a few years worth of profitable operations, strong growth, strong assets and have a good management structure in place. Unfortunately, few of the carriers and brokers that weathered the recession will be able to meet all these criteria. Fortunately, conventional business loans are not the only financing option for this industry. And in many cases, it may not be the best option either.

Most freight carriers and brokers experience cash flow problems because they cannot afford to wait 30 to 60 days for customers to pay their freight bills. Most transportation companies have heavy ongoing expenses – there are drivers to be paid, trucks that need repair and a number of other expenses. It’s not unusual for undercapitalized carriers to run into cash flow problems because they can’t afford to wait for their freight bills to be paid. One way to fix this problem is to implement a freight bill factoring program.

Freight factoring solves this cash flow problem by providing you with an advance for your freight bills. Instead of waiting 30 to 60 days to get paid by the shipper, you can get up to 90% immediately from the factoring company. This provides you with the cash you need to pay your drivers and cover your business expenses. Once your shipper pays the bill in full, the factoring company rebates the remaining 10%, less a small financing fee.

One of the advantages of freight factoring is that is fairly easy to obtain and it does not have the burdensome qualification requirements of conventional business financing programs. The most important variable for qualifying is having customers with good commercial credit. This is your most important collateral from a factoring standpoint. Additionally, the business and its owners need to be free of legal and tax problems. This makes freight bill factoring an accessible solution for new and established freight companies that are looking to grow.

Most new and growing transportation companies have one thing in common – cash flow problems. Unless they have a quick pay set up with their clients, most freight shippers and carriers can expect their bills to be paid in 30 to 45 days. This can be a problem for many because they have to bear the costs of delivering the freight and then carry all the company expenses while waiting to get paid. The company needs to have a substantial cash cushion to be able to absorb all the costs – or risk delaying important payments.

One way to solve this problem is to cover the time gap with business financing. The challenge with conventional business financing is that it’s very difficult to obtain, especially in today’s environment. Most lending institutions will scrutinize every detail of the company before making a business loan. This means that to qualify, your business will need to have at least two years of positive financial statements, strong assets and owners with a solid background. Startups and small freight companies will have a tough time meeting these requirements.

There is an alternative solution to this problem though. You could factor your freight bills. This eliminates the anxiety of waiting for your customers to pay. It can provide predictable cash flow ensuring you have funds to pay for drivers, fuel and repairs. And as opposed to most conventional financing, freight bill factoring is relatively easy to obtain.

Freight factoring offers a fairly simple proposition. A factoring company provides you with an advance for your freight bills. They hold them as collateral while waiting for the customer to pay. Once the freight bill is paid, the transaction is settled. Usually, factoring companies advance about 90% of the freight bill once the load is delivered. You get immediate funds. The remaining 10%, less the factoring fee, once the customers pays the bill in full.

The transaction flow usually works as follows:

1. You send the freight bills and documentation to the factoring company
2. The factoring company advances 90% of the invoice and deposits it in your account
3. The factoring company verifies the invoices mails the freight bills to your client for payment
4. Your client pays the invoice in full. You receive the settlement of 10% less the factoring fee

There are two key areas where factoring differs from other types of financing. First, the factoring company verifies the invoices to ensure they are accurate (step #3). This is a critical step since the invoice is the collateral for the transaction and it must be verified before funding. Second, the client usually sends the payment for the freight bill to the factoring company, on behalf of the client, rather than to the client directly (step 4). This enables the factoring company to then settle the transaction and close it. Freight factoring is relatively common in the transportation industry and most shippers understand the need for factoring and are comfortable working with these procedures.

Another important difference between factoring and conventional financing is how collateral is evaluated. In a factoring transaction, the freight bill is the collateral in the transaction. Factoring companies will look at the credit of your customers very closely to determine eligibility and invoice quality. Only those bills coming from credit worthy customers can be financed. The advantage of this, is that a transportation company can use their customers credit to their own advantage. A small freight carrier or broker with a solid roster of customers that may not be able to get a business loan but will usually have a good chance of obtaining factoring.

Going through the business loan application process with a financial institution can be a challenging and time consuming task. Preparing the application package usually requires a lot of effort and time while you collect the relevant information – past tax returns, financial statements, sales projections, management team biographies and so on. But getting financing is usually critical for the success of the business, so the business owners and managers go through the process. So what do you do if after all the effort you invested in getting a business loan, your application is declined?

The biggest mistake business owners can make at this point is taking it personally and losing their calm. The smart approach is to keep calm and detached. Although easier said than done, this is an important step that may help you get the funding you need. Your next step is to try and find out why the application got rejected. Sometimes, lending officers won’t want to go into details about your rejection because they fear offending the client. However, this information can be critical for your success, so try to persuade the lending officer to give you some details – but do so in a friendly manner. One approach that can work in this circumstance it to say something along the lines of ” I understand that your institution won’t be able to help me. However, I plan to apply at another institution. Could you help me understand how to strengthen my application?” Then be quiet and listen carefully. The information the lending officer provides you will be very valuable and will help you in your subsequent applications.

Once you have gathered this information, you should meet with you financial professional and re-assess your application and needs. This is very important, unless you are a financial professional yourself, you should get the advice of one. You should also decide whether you should re-apply for a business loan or an look alternate business financing product.

One alternative source of business financing that has been gaining traction during the recession and ensuing credit crunch is invoice financing. This tool can help businesses that are having cash flow problems caused by customers are paying their invoices more slowly. Many times, invoice financing can be used as a stop gap solution to help shore up your business while you look for a more permanent business financing solution.

One last thing to keep in mind is that a number of lending institutions are in bad financial shape and are only lending money to their absolute best customers. In this case, a business loan application rejection may be more a reflection of the financial health of the institution, rather than that of your business. If you plan to obtain bank financing, it’s a good idea to go to the FDIC’s website (www.fdic.gov) to check out the health of the bank. You will need a financial professional to help you review the data, but it will save you time by allowing you to focus only on healthy institutions that have the capabilities to make loans.

One industry that is improving, along with the economy, is transportation. Many existing transportation carriers and freight brokers are seeing their revenues increase as the industry picks up. The improved economic outlook and the condition of the industry have also prompted individuals with industry experience to start new freight brokerages.

Although running a freight brokerage can be very profitable, the business is very cash flow intensive. You need to keep your drivers happy, which means they need to be paid quickly. In the meantime, your large corporate customers will demand that you give them net 30 payment terms. In other words, your drivers want you to pay them quickly and your shippers want to pay you slowly. As a freight broker, you are expected to manage that payment discrepancy and keep all parties happy.

Few startup or growing brokers can afford to wait 30 days to get paid by their clients. Simply, they don’t have the funds to cover the operating expenses of the business. This is a big limitation for them and prevents them from growing the business and capitalizing on opportunities. To complicate matters, getting business financing for a freight brokerage is very difficult. Few banks will provide business loans to the industry in part because they don’t have hard assets (i.e. real estate) to use as collateral. Either way, a business loan is no necessarily the best solution either.

A better alternative for many freight brokers that have cash flow problems is to use freight factoring. This solution is designed specifically to help companies that have clients that pay in 30 days but need the funds sooner. Freight bill factoring provides a cash advance on the net 30 invoices, providing the necessary funding to pay drivers and other business expenses in a timely fashion.

One of the most attractive features of freight factoring is that most freight brokers can qualify for it – even startups. This is because factoring companies consider your freight bills from strong shippers to be your best collateral, and they are usually happy to advance funds against them. This means that brokers with few assets except a strong roster of shipping clients can usually qualify. Aside from having strong shippers, most factoring companies will only work with freight brokerages that have no lawsuits, judgments or liens.

Freight bill factoring is an ideal solution for freight brokers and transportation carriers who can’t afford to wait 30 days or more to get paid by their clients.

Although the economy still has challenges, most experts agree that conditions are improving. Unfortunately, this does not mean that getting conventional business financing will be easier. The sad truth is that many lending institutions are still licking their wounds from the excesses of the subprime credit bubble and few are willing to lend to companies – unless they have substantial collateral. Even institutions that are providing business loans to small businesses are focusing only on the bigger small businesses. So, where does this leave small and new businesses? Not in a very good place.

Small companies have had to improvise to survive the crisis. Not only bootstrapping their operations, but also looking for less conventional sources of funding. One of these less conventional sources of financing is invoice factoring. Although factoring has been available for decades, it’s gained mainstream notoriety during the recession because it was one of the only sources of funding available to small and new companies.

One of the biggest challenges that small businesses are dealing with are slow paying commercial customers. In the past, commercial clients paid their invoices in 15 to 30 days. Nowadays it tales closer to 45 or even 60 days to get paid. Few small businesses, let alone startups, have the capital reserves to wait that long to be paid. Invoice factoring helps these companies by providing them with a funding advance against their invoices/receivables.

Factoring reduces the time to get paid dramatically, freeing up your cash flow and allowing you to meet existing business demand – or deploy it to pursue new sales opportunities. Most small companies use factoring as a stepping stone to grow the business and eventually qualify for more conventional financing.

As opposed to most conventional financing alternatives, qualifying for accounts receivable factoring is relatively easy. The most important requirement is that you do business with reliable credit worthy companies. Aside from that, your company needs to be free of legal problems.

Factoring is rapidly becoming a common way to finance a business, especially now that business loans are difficult to get. It is a good business financing tool that can work very well for growing companies – or companies that have cash flow problems.

Invoice factoring is a specialized form of financing that is designed to help companies that have one very specific problem – they sell to their clients on net 30 to net 60 terms but can’t afford to wait to get paid. Businesses find themselves with this challenge due to a number of reasons but the two most common reasons are poor capitalization or fast growth. As a matter of fact, fast growth is the main reason companies chose to do business with a factoring company. For example, a small company gets a very large order from a client. They can deliver it but can’t afford to wait 30 days to get paid because they have their own expenses to cover. One option is to turn the sale away. Another one is to factor it.

So how does factoring help a company that can’t wait 30 to 60 days to get paid? Simple – it provides a cash advance against those invoices. The advance enables the client to cover business expenses without worrying about the timing of client payments. The transaction is settled once the end customer pays the invoice in full.

Most factoring transactions are structured as an invoice purchase rather than a business loan. The factoring company buys the invoice from the client and pays for it in two installments. The first installment is called the advance and can be anywhere from 70% to 90% of the invoice value. The remaining part (10% to 30% of the invoice) is not advanced and used as a reserve to cover factoring fees and invoice discrepancies. The second installment, called the rebate, is provided once the invoice is paid in full. The amount rebated is usually the reserve, less any fees and payment discrepancies.

One of the biggest advantages of factoring is that is available to companies that have no hard assets (such as real estate) and little or no credit history. This makes it an ideal funding solution for small and medium sized companies that can’t afford to wait up to 45 days to get paid by their clients.

Slow paying clients can be a major problem for companies; consuming time, resources and jeopardizing the financial stability of many small and medium sized businesses. Like it or not, the current recession and slow recovery have forced many businesses to live from invoice to invoice. A late payment can have a negative effect, forcing the company to delay payroll or critical supplier payments.

The best way to handle a slow paying client is to prevent the situation from happening in the first place. It’s a lot more effective to spend your resources ensuring clients pay on time, rather than chasing slow payers. This can be accomplished fairly easily.

There are two things you need to do to make sure commercial clients pay one time. First, you need to check their commercial credit rating / payment history – and only give credit terms to those that have an acceptable credit report. This can be done by using one of the many business credit bureaus that exist. Most reports are relatively inexpensive. Second, you need to have a good invoicing and follow up procedure in place. This will take some work but will have a substantial payoff. Be sure to send invoices to clients in a timely fashion and be sure to verify that they received the invoice.

If your clients won’t pay their invoices sooner, your second option is to finance your invoices using invoice factoring. The factoring financing advance can be used to cover your business expenses, while you wait for your clients to pay. The transaction with the factoring company is settled once your client pays the invoice in full.

Factoring has two advantages. First, it can improve your finances, especially when combined with a good invoice management program. Second, and perhaps more importantly, it gives you control of your cash flow, eliminating the guesswork of when clients will pay. This enables business owners to spend more time running their business and less time chasing invoices.

Qualifying for factoring is relatively easy. You need to have clients with a good commercial credit rating and good invoicing practices. Additionally, your company has to be free of encumbrances.

Most machine shops tend to be very cash flow intensive companies. They have to handle purchase orders, pay suppliers, handle payroll and collect from clients. All these events have to happen with the right timing for the business to be successful. And usually, timing is very tight. And unless the company is well funded, this means that the company is very sensitive to late client payments. For example, a client delay in a payment can trigger a chain reaction of events that leads to missing supplier payments or delaying payroll.

This problem can easily be solved with business financing. Unfortunately, getting financing in the current economic environment is very difficult. Few institutions are willing to provide business loans or lines of credit to companies that can’t provide sufficient and substantial secondary collateral. Aside from having substantial assets, companies need to show impeccable financial statements, a strong management team and a solid business plan. Few small or midsized machine shops can meet these requirements – putting a business loan out of the reach of most.

A second alternative is to ensure that client payments are always on time, or ahead of schedule. While coaxing clients to pay quickly can be difficult, you can accomplish a similar result by financing your invoices with using factoring financing. Invoice factoring provides you an advance on your invoices, providing the funding you need to meet expenses and complete projects. The transaction is settled once your client actually pays the invoice.

Since factoring provides a predictable and accelerated payment stream, your company is usually in a better position to take on new clients and projects. When used correctly, accounts receivable factoring can help a company grow.

In general, factoring is much easier to obtain than a business loan. To qualify for it, your clients must be credit worthy companies, and your business must be free of liens and encumbrances. Thanks to the current difficulties in getting conventional funding, invoice factoring has been gaining traction in becoming a mainstream source of funding.

The field of Information technology (IT) is full of small and medium sized companies that are vying for customers and for position. Surviving in this cutthroat industry requires that owners manage their businesses, especially their cash flow, very carefully.

The IT industry is known for having heavy expenses. Payrolls tend to be high since technical employees command high wages. Also, if the company also resells hardware, if not unusual for equipment and inventory expenses to grow quickly, especially if the firm is involved in large projects.

On the revenue side, clients usually pay their invoices in 30 to 60 days. Because of this, the firm must usually cover its overhead and other expenses for a time before being able to recoup their investment. Waiting to be paid can be a challenge for many small or medium sized IT firms. Furthermore, few small firms have enough capital to handle payment delays. That means that the firm could be at risk of missing supplier or employee payments, if a few clients delay their invoice payments.

If the company has funds in the bank, a few late invoices will not affect things at all. However, if the firm is running lean, there are only three things you can do. You can delay your supplier payments until you get paid, you can try and arrange for quicker payment or you can get business financing.

Negotiating payment schedules with clients and suppliers can be tricky and seldom produces predictable results. Most small and medium sized firms will probably be better of getting formal financing. One emerging financing solution called factoring is ideal for this type of situation. Invoice factoring eliminates having to wait for your clients to pay by providing you with a funding advance on your invoices. You get stable and predictable cash flow, which enables you to focus on running your company, rather than on collecting invoices. The transaction is settled with the factoring company once your client pays the invoice.

Invoice factoring is relatively easy to qualify for and available to small and medium sized businesses. The biggest requirements to qualify are that your clients must have good commercial credit scores and your business must be free of encumbrances.

Factoring can be a great solution for small and midsized IT companies that can’t afford to wait 30 to 60 days to get paid by their clients.