Freight Factoring: Bridge Loans for the Transportation Industry

Recent economic difficulties have led several states to propose new tolling stations or to raise tolls at existing stations, putting an additional financial burden on over-the-road trucking firms and shipping companies. The Virginia Department of Transportation is planning to build a new toll plaza on Interstate 95 to raise funds for infrastructure development and repairs. In a similar move, the Pennsylvania Turnpike Commission recently passed a two percent increase for toll roads in its state. These added expenses come at a time when many companies in the transportation sector are already struggling due to higher fuel prices and increased regulatory oversight. As a result, some trucking and shipping companies are looking for new business lending arrangements to allow them to continue operations and manage their financial affairs more effectively.

Bridging the gap

In the transportation industry, managing the financial elements of the operation can be a significant undertaking. There is often a significant gap between delivery of shipping services and payment for invoices, causing cash flow shortfalls that can limit the company's ability to take on new assignments and manage their financial affairs in an effective way. As a result of these delays in payment, freight factoring companies have become more common in the transportation field. The business bridge loans provided by these companies can be used to cover unexpected expenses and to maintain operations even when invoice payments are significantly delayed.

Freight factoring

Business factoring loans are a form of accounts receivable financing designed specifically for companies in the transportation and shipping industries. These innovative financial arrangements provide cash on hand for the numerous expenses incurred during shipping and transporting freight from origin point to destination. Rather than using the business or its vehicles as collateral, freight factoring companies accept unpaid invoices as securities for these types of short term loans. This allows greater financial flexibility for trucking firms and other shipping concerns.

Added security for shipping companies

Freight factoring companies often require business credit reports not only for the company receiving their financial services but also for the clients of that company. By running credit checks on customers of the shipping firm before the services are rendered, these firms can ensure that the invoices they take as collateral are likely to be paid in a timely manner. This added level of service can prove helpful for trucking companies, as they can avoid accepting assignments from clients who may not have the means or the inclination to pay. The cost of these business credit reports are usually included in the overall cost of the lending arrangements with freight factoring companies and are used by the lender to determine the worth of the invoices used to collateralize the loan or line of credit.

Commercial credit reports

Ansonia Credit Data is a great resource for business credit reports.  They are a leading commercial credit reporting company dedicated to providing customers with the most accurate and affordable business credit reports available so they can make the best decisions possible. Ansonia maintains a global database on companies of every size, industry and market segment, receiving more than a half billion dollars daily in new accounts receivable activity. Ansonia credit reports help businesses to improve their management of credit risk, payment practices and cash flow, and automate decision-making.

Finding the right accounts receivable financing arrangement can be difficult. CNF Exchange can help transportation companies connect with the business factoring loans they need to maintain operations and stay profitable even in challenging economic times.

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