Trucking Research Paper

In the trucking and transport industry, it is paramount to keep your cash flow from being dammed up, and to keep money moving. Many trucking owners will tell you that expenses often exceed cash on hand, and sometimes owners need the help of an outside source to strengthen cash flow. But before reaching out to a bank for a traditional loan or line of credit, remember that a bank loan is not always the easiest —or most expeditious — financial move.

Because the commercial banking system is risk-averse by nature, banks will often resist lending money to trucking businesses. This is because banks need to be satisfied that your enterprise can sustain operations, manage debt payment, and is not in danger of becoming a credit risk.

This means that most start-up companies, as well as small and midsize carriers in the trucking industry (who often lack strong credit history and solid collateral to assuage the bank’s concerns) failed to meet the often-stringent qualification requirements to secure loans or lines of credit from major financial institutions. …show more content…
Because factoring is not a loan (it is in fact the selling of accounts receivable at a discount in exchange for immediate funding) funding can often be acquired the same day. Invoice factoring — also known as freight factoring — allows trucking companies to sell their most valuable financial asset in order to receive immediate funding, helping them deal with regular day-to-day overhead costs. After delivering freight, many trucking companies have to wait 30, 60, or even 90 days to receive payment, which creates considerable stress on cash flow. And any expert will tell you that working capital is necessary to keep fleets moving. Consequently, the trucking industry is turning to freight factoring for a number of