Imagine such situation: you suddenly find that your business is in a cash squeeze. And you started your small trucking company with five units and a lot of industry experience. Besides, things started out well, with revenues per mile on an upward trend, and an addition of two units the first year. But you have begun problems with the expense pressure of higher fuel expenses, driver settlements, permits, insurance, and repairs. And if you add to the mix some uncollectible accounts, then your margins will begin to suffer.

So, tightening cash flow even further is the credit you are extending to your customers. If you take a look at your accounts receivable aging schedule, then you'll probably see many accounts over 30 days. Unluckily, it is not possible for you to put off payroll, fuel, and other costs for thirty or more days.

But should you adopt a COD payment policy in this case? You can also add a service charge to all accounts over 30 days and fervently sticking to it. However, neither of these solutions is advisable and wise. This is because you will likely lose customers right and left. Don't forget that you are in a highly competitive industry. That's why, some companies would jump at the chance to get new customers. And for this they will offer credit that you won't.  

Fortunately, there is a service that can provide a safety net for your company. And in this way you will be able to convert freight bills into instant cash flow within 24 hours. This service is called invoice factoring.

Factoring has been a useful financing tool for centuries. It is used by manufacturers, distributors, service providers (such as trucking companies) to stabilize their cash flow.

It is the purchase of a company's accounts receivable at a reduction. Besides, the process is simple:

1. Firstly, you have to fill out a simple application and include a receivables aging report.

2. Then factoring company reviews the application and determines credit worthiness of the client's customers.

3. Letter of intent is given to the client, outlining the proposed advance rate (classically 80%-90% of the invoice), and fee structure. So, usually it is from 2%-3% per month relying on some factors.

4. Upon acceptance of the terms, a formal contract is executed.

5. As for initial funding, it can occur within 3-5 days.