Mixed cargo fleets are made up of a variety of commercial vehicles that haul different loads. You might have big rigs for hauling merchandise from a factory to a retailer’s main warehouse. There could be refrigerated trailers for perishable goods. You also have trucks for wide loads or hazardous materials.
While there can be money in a trucking company with the reach to help multiple industries, there are also financial challenges. A freight factoring arrangement with TBS Factoring that’s tailored to your company’s needs makes managing mixed cargo fleets a lot easier.
Recognizing the Financial Needs of Mixed Cargo Fleets
Mixed cargo fleet owners often struggle to maintain a strong cash flow. When you’re hauling for FEMA, you might not see a payment for several months. Another client might pay on the 1st of the month, but you have others who wait six to eight weeks.
Meanwhile, you have fuel to pay for. Your trucks need maintenance and repairs. You have insurance to pay, permits and certificates to maintain, and salaries and benefits to cover. When you owe a debt, banks and other creditors aren’t going to accept excuses. You promised to pay on time, so that’s what they expect. You can’t let payment delays keep you from paying bills on time. If you do, your credit rating will take a hit.
Because you need a strong cash flow, freight factoring becomes the perfect solution. You can get part of the money you’re owed long before you get it from your client. Use that advanced funding to keep your bills paid, your trucks maintained, and your employees from leaving.
With factoring, you can choose non-recourse factoring where you don’t have to repay money if your client doesn’t pay when promised. There’s also recourse, which has a lower fee, but you must repay it if your client fails to pay. This is one of many choices you’ll make when setting up customized freight factoring plans.
You need to consider the following as you look into freight factoring arrangements.
- Can I pick and choose which clients go through the factoring company and which I handle on my own?
- Does the factoring company specialize in the trucking industry? How?
- What are the rates for mixed cargo fleets? How many trucks do I need to get the lowest rate? Is there a minimum I must meet to avoid penalties?
- How quickly will I get paid?
- Is there a gas discount? How much is it?
Understanding the Benefits of Freight Factoring for Your Fleet
Freight factoring is helpful to any mixed cargo fleet business. Here are some of the ways it benefits you.
Same-Day Payments
When you sign up with freight factoring, you get money as quickly as the same day. Suppose your trucks handle $25,000 in loads for a specific broker. Usually, that broker pays NET30 terms, so you wait a full month before the money arrives. It’s not helping you build a strong cash flow.
Instead, you sign up with TBS Factoring and get paid 50% upfront. You get $12,500, minus freight factoring fees, that day or within a couple of business days. You now have money to use on bills, salaries, repairs, and maintenance. When your client pays the invoice, you get the balance.
You can have payment options customized to match the different cargo you haul. You might want same-day payments for FEMA loads, but you know they’ll pay so recourse arrangements aren’t necessary. Meanwhile, your general cargo runs often are for clients you haven’t worked with before. You want non-recourse factoring with them because you don’t know if they’ll abruptly shut down.
Free Business Credit Checks
Freight factoring companies like TBS provide unlimited free credit checks. Use these to thoroughly investigate a client before you agree to work with them. If a company hasn’t paid another trucking company in three months, move on and find someone else. You’ve avoided hauling a load for a client who is unlikely to pay you back.
Less Office Work
When you have mixed cargo fleets, the invoicing and collections processes will differ between companies. Rates for freight factoring and the per-mile charge you get from the broker or shipper are all going to differ. Freight factoring companies track these differences for you. A factor takes care of the invoicing and leaves you with files you can upload directly to your bookkeeping software. That saves a lot of time and hassle.
Improved Credit Score
Because freight factoring isn’t a loan or extension of credit, it doesn’t negatively impact your credit rating. It can help increase your score because you’re not taking out a loan or credit card, which counts against you. It also helps you pay bills on time, which is a leading factor in a high business credit score.
Don’t Overlook These Three Important Considerations
When you’re considering your finances, make sure you’re considering three other factors that impact mixed cargo fleets. If you can find a freight factoring company that offers these additional services, you’ll find it easier to save money and build a strong cash flow.
First, your insurance coverage may be more complex. When you’re hauling different items and adding in things like hazardous materials, you risk having much higher insurance rates. Be prepared to negotiate to find the lowest prices that also don’t skimp on coverage. A freight factoring company that helps you get competitive rates is going to help you out.
Second, your fuel needs may increase. Heavy loads take more powerful engines, and that can lower the MPG you get. Fuel discounts are essential when it comes to keeping your fuel costs as low as possible.
Third, mixed cargo fleets need to keep state and federal regulations in mind. If you plan to haul loads for FEMA, you need to apply. You need to have hazmat certifications in place. Make sure you have drivers who can haul hazmat loads. Having a freight factoring partner that offers guidance on how to complete the applications and pass inspections is important.
TBS Factoring helps with all of that. In addition to expertise in freight factoring, we also have insurance partners to ensure you get a competitive rate. We offer same-day payments and substantial fuel discounts of up to 90 cents per gallon. Plus, we have guides that help you pass DOT inspections and secure the correct permits. Contact us today to learn more about how we can help you.