Mamaroneck, New York
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Truck Factoring to Help Cash Flow

The health of any business, and in particular small to medium ones, can be made or broken by cash flow. No matter how well the business is doing on paper, when payments don’t come in when needed to keep the wheels turning, the business may be in trouble. This is especially true for the trucking and freight industry, where a lot of small operators with one or two trucks are the backbone. When payment terms are 30 to 60 days, it can become a real problem. This is where truck factoring comes in.

What is truck factoring?

Simply put, truck factoring is when business owners trade their accounts receivable (i.e. invoices for trucking contracts) for an advance of 97% or so of the total amount to a financing company. It is similar to rediscounting, but the charges are much smaller. Truck factoring companies will charge as little as 1%, or as much as 3%, of the total amount as a handling fee, and will undertake the collection of the account receivable.

How does this help with cash flow?

Ideally, a trucking company will have sufficient cash flow that it can wait for its accounts receivable to become due. But if this is not the case, truck factoring ensures that the truck business owner has the funds to keep the business going even if their contracts have 30 to 60 day payment terms. After all, overhead expenses come in daily, and owners can’t afford to keep their trucks idle while they wait for payments to come in to fund daily operations.

Truck factoring is miles ahead of any other type of financial assistance for business owners because the processing time is short and the charges much smaller. Initially, the truck factoring service will advance 90% of the total amount due, keeping the 10% in escrow until a successful collection. The truck owner will then get the remaining money due less the service charges of the truck factoring company. It is the best way to keep the cash flowing in the right direction.

A Few Bankruptcy Options

With over a million people filing for bankruptcy annually, it shows that more people are becoming aware of their legal rights regarding financial problems. Filing for bankruptcy is not necessarily intended as an escape from monetary debts, but rather a way to enable you to gain back control of your financial life for a fresh start.

A bankruptcy attorney usually understands the unbearable pressure that often accompanies increasing, unmanageable debts. He or she also knows that this is almost always followed by agents or creditors hounding you for your debt’s payment, mortgage foreclosure, or repossession of your vehicle.

A bankruptcy attorney can help you find a workable solution, though. Through his or her training and expertise in bankruptcy , many individuals, families, and business owners have been able to settle debts in ways that were best for them. With his or her help, you too can improve your finances. By helping you assess your real financial status, a legal professional can help you understand which particular bankruptcy structure is best for you:

  • Chapter 12 bankruptcy
  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy
  • Chapter 11 Bankruptcy

Chapter 7 is a personal bankruptcy usually invoked by those with overwhelming debts and a low enough income to help them save their assets and get rid of certain debts. Chapter 13 will keep you from being hounded by creditors and give you a certain amount of time and structured plan to pay off your debts. Chapter 12 on the other hand, is very similar to Chapter 13 but offers certain benefits and special support to fisherman and farmers who are seeking financial assistance through bankruptcy. Chapter 11 allows businesses to restructure and pay off certain debts while still remaining in operation. Depending on your situation, you may qualify for multiple types of bankruptcy; however, one type is likely to be the most beneficial for you.