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Independent trucking operators have to face financial realities that don’t exactly make business easy for them. One example is the 30 to 60-day payment wait, which can be hard on the business and set back its overall scalability. Factoring de carga is a reliable solution for bridging the capital gap many independent truckers face, making it much easier to scale your business and avoid the wait for payment while maintaining financial stability. While business loans might seem like a traditional and reliable option, they are not comparable to freight factoring, as factoring is faster, more flexible, and designed to keep operators moving forward and cash stable. We’re going to take a look at freight factoring and how it compares to traditional business loans, to give you an idea of how they compare and why freight factoring is a more reliable and stable option for your independent trucking business.
Understanding What Freight Factoring Is
Freight factoring is the process of having a factoring company take care of all your invoices by selling the unpaid invoices to the factoring company for immediate cash. Usually, the company pays a high percentage of the invoice amount immediately, so truckers avoid waiting the 30- to 60-day period to get paid. The logistics begin with the usual load delivery, then the trucker submits the invoice, the factoring company verifies that you delivered the load, and then the trucker is paid the same day. Freight factoring is a reliable way to get cash flow immediately and keep it stable for independent truckers, who often have to wait for payment or deal with delayed invoices that stunt scalability and business growth. Usually, as with TBS, there are options for fuel cards and dispatching integrations that also streamline cash flow and financial management, ensuring that every area of the business has a solid financial foundation.
Understanding Traditional Business Loans
Traditional business loans might be the more common scenario for trucking companies, but they have limitations that can be an issue for independent truckers. Business loans often start with approval for a particular loan amount, which you will then repay to the trucking company or independent trucker, plus interest. Getting approved for these loans can already cause issues for some truckers, as they require credit checks, collateral, and typically involve a wait time for approval. Sometimes it can take weeks or even months to get approved for a traditional business loan, leaving you in the dark until you receive approval or a denial of the loan application.
Limitations of traditional business loans include strict repayment schedules, interest accrual, and the potential for increased debt. As a business owner, consider all of these limitations when deciding which option is best for you financially.
Business Loans vs Freight Factoring
When looking at the details of each of these financial options, there are key differences that will determine which option is the right fit for you as an independent trucker. The approval speed of business loans can oftentimes take weeks or months, whereas freight factoring gives you same-day funding upon approval of the invoice. Unlike business loans, where the independent trucker’s credit score is the focus, freight factoring companies prioritize shippers’ creditworthiness during credit checks. The scalability factor of freight factoring is essential for growing businesses, as it continually adjusts to your business’s growth, whereas a business loan remains a fixed amount. Repayment terms are very flexible with factoring, whereas business loans require a strict repayment term that also includes interest.
With TBS factoring, there is much more flexibility and scalability for your business. There is also less pressure on you, as the independent trucker, for requirements such as credit checks or collateral.
Why Should You Choose TBS Freight Factoring?
When we look at the pros and cons of factoring and business loans, there are apparent differences that would affect an independent trucker specifically. TBS freight factoring offers a variety of benefits to truckers who choose to work with them, making it a much more stable option than a traditional business loan. Here’s a look at some of those benefits that you can expect with TBS freight factoring:
Immediate Capital: One of the most significant benefits of working with a factoring company is the ability to receive cash immediately for invoices, avoiding the waiting period and enabling greater financial flexibility and growth.
Stable Cash Flow: With immediate cash inflows from invoices, the business’s stability improves. You will know how much you’re getting paid and when, bringing in more consistency.
Administrative Support: TBS factoring doesn’t just handle invoices; we also handle collections and invoice processing, so you don’t have to. Taking on admin work reduces back-office workload and allows you to focus on your trucking business.
Nonpayment Protection: TBS conducts credit analysis of shippers to avoid dealing with typical non-paying clients.
Stabilized Operations: It’s normal to deal with seasonal fluctuations and freight downturns, but working with TBS factoring helps you stay stabilized during uncertain times with the immediate cash flow and financial stability that come with it.
A Smarter Financial Strategy for Independent Truckers
Working with a factoring company like TBS is a wise decision for your financial stability when it comes to being an independent trucker. With TBS Factoring, we help you to stay on top of your finances with stability and instant cash flow. Independent trucking has its benefits, but managing wait times for payment delivery can be challenging. That’s where freight factoring comes in. Opposed to business loans, freight factoring gives you instant cash flow without the risks like credit checks, debt accumulation, and the possibility of non-payment from clients. If you’re an independent trucker looking for a way to manage your finances, keep cash flow coming in, and build a more financially stable business without the risk of a loan, póngase en contacto con us today. We can get you set up in our TBS Factoring system so you can get paid now.
