![]() Once your client pays, you receive the remaining balance of the invoice less fees. When you submit the invoice for factoring, you transfer the responsibility for collecting the customer payment to the factoring company. You receive up to 85% of the invoice value as an upfront cash advance. Invoice factoring, also known as transportation factoring and Debt Factoring, is a solution where you use your outstanding invoices as collateral for fast funding. There are two main types of transportation Invoice Finance. It speeds up your ability to access funds after you complete a haul and raise an invoice. Transport Invoice Finance is a flexible solution that can be tailored to meet the needs of your trucking company. How Does Transportation Invoice Finance Work? Unlike a traditional bank loan, Invoice Finance helps businesses within the transportation industry release capital from within the business rather than take on new debt. Once the customer has paid the invoice, the funding provider releases the remaining balance of the invoice, minus the fees for the facility. This fast funding means the business can pay drivers, cover fuel costs, and reinvest faster. Instead of waiting 30+ days to receive payment, a trucking company can submit the invoice to the lender and get a cash advance of up to 85% of the invoice value within 24 hours. You can use unpaid customer accounts receivable invoices as collateral for funding. Transportation Invoice Finance, also known as freight or transport factoring, is a funding solution that helps transport companies to bridge the gap between raising an invoice and receiving customer payment. One of the best ways to get back in control of cash flow is transportation Invoice Finance. The late-payment average for the transport industry increased by 500% between August 2019 and August 2020. However, for an owner-operator business, it could mean you’re unable to take on new contracts and afford to keep your truck on the road.ĭespite playing a huge role in keeping the country moving during the COVID-19 pandemic, the transport sector was hit hard by late customer payments. So you have to wait 30+ days for your outstanding customer invoices to be paid.ĭuring this period, your transportation company has to pay for your drivers, fuel costs, and the upkeep of your vehicles.įor a larger transport company with lots of capital, this can cause cash flow issues. Being able to access funds quickly allows you to cover the costs of the job and receive your profit.īut most shippers and commercial clients pay on net terms. In an ideal world, every client would provide payment within a couple of days of receiving an invoice. Why Transport Businesses Need Invoice Finance You’ll learn everything you need to know if this type of financing is right for your business. This guide will explore what transportation Invoice Finance is and how it works. ![]() That’s why many transport and trucking companies turn to Invoice Finance. It can even cause a cash flow gap that prevents you from taking on new contracts. Waiting this long to receive payment for an invoice can stop you from reinvesting in your trucking business. ![]() It’s not unusual for large clients to require up to 60-day net terms to pay for a haul. Transportation companies are at the heart of the Australian economy and play a vital role in every sector.īut in an industry where margins are tight, rising fuel costs and extended payment terms can stretch working capital.
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