There are many synonyms for the ways that the Stockmarket has reacted during the last few months. And as the current administration leads Washington and the new President works to appoint cabinet members it should come as no surprise that everyone is watching how the economy is reacting. And while the nation continues to see the number of Covid cases and resulting deaths increase, it would appear that the exact opposite is true of the economy. As it dwindles, decreases, and drops, there are many who are looking for a way to make sure that they find themselves on the right side of the deals.
And while the individual struggle is certainly real, it is important to note that there are also many businesses that are in real trouble. In an effort to make sure that a business jumps at the opportunities that are available, it is essential that they have access to the right kind of resources. Fortunately, even before the pandemic there was a platform in place to offer companies of all size cash assets to help them navigate the difficult time between providing services and billing customers and receiving payments. Known as advance business capital factoring, these companies offer a revolving set of credit to help companies make the most of any immediate opportunity.
What Is a Factoring Company Used for in the Trucking Industry?
In its most simple form, invoice factoring is a type of accounts receivable financing that converts outstanding invoices due within 90 days into immediate cash for your small business. The pandemic has been a perfect example of how companies need to have quick access to needed resources. A small company, for instance, may have found itself in need of hiring more drivers and leasing more trucks. Having the capitol to get make such a fast move, however, is a perfect example of what is a factoring company used for. Freight capital factoring companies can help small businesses bridge invoice payment gaps with upfront payments up to 90% of the original invoice. In the case of a trucking company, this 90% can serve as a real advantage when a company has to make a fast transition. And while transportation factoring companies may be the most common example of what is a factoring company used for, it is important to note that there are also other businesses that make use of this unique kind of financing option.
An unfortunate part of the U.S. economy in the last few decades has been that bankruptcies for small businesses have failed in record numbers. In fact, in the U.S. the number of bankruptcies increased to 25,227 companies in the second quarter of 2016, from 24,797 companies in the first quarter of 2016. Following the pandemic, however, there are even more businesses at risk.
What is a Factoring Company’s Function in the Small Business World
No matter what kind of business you are running, it is important to know that there are always times when more capital is needed. Consider one of these facts and figures about the many times when factoring companies are used:
- Nearly 12 million trucks, rail cars, locomotives, and vessels move goods over the transportation network, but every one of these moving parts requires expense upkeep and maintenance.
- Approximately 5.9 million commercial motor vehicle drivers operate in the U.S., according to the Federal Motor Carrier Safety Administration.
- going into the pandemic there were nearly 28 million small businesses in the U.S. Economists are concerned, however, how many of these will survive the challenges of the recent pandemic.
- The factor advances most of the invoice amount, typically 70% to 90%, after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction also known as a factoring fee, according to the Wall Street Journal.
- Sending paper invoices is 57% more expensive than sending an electronic invoice. As a result, many businesses make sure that they are moving toward a digital billing platform.
Everyone needs help at some time and during the pandemic is no exception. From individuals to small businesses, there are many times when advance capitol factoring services are the perfect solution.