Solving Supply Chain Issues in the Transportation Industry

Recent, heavy demands on the supply chain have caused issues that are affecting almost everyone, especially members of the supply chain itself. Transportation companies, freight businesses, and commercial fleets are being hit hardest and may be taking serious financial hits as a result. At J D Factors, we can show you how to roll with the punches without the debt.

Increase Financial Stability

The key to financial stability is maintaining a steady inflow of working capital. So that even if interest rates or loan payments continue rising, you’ll be able to sustain your business operations. One way to increase your working capital involves the payment schedules of your invoices. The typical payment windows for an invoice issued by a transportation company is 30 or 60 days. Sometimes businesses even offer 90-day payment windows. These lengthy waiting periods mean that you’re not generating revenue as quickly as you’re actually able to.

During the current supply chain crisis, you want to receive your revenue as soon as possible by removing these wait times. That’s why many transportation companies are using accounts receivable factoring to gain access to their revenue more quickly.

With factoring, any unpaid invoices are turned into cash and quickly made available. This is a fast, simple process that lets you access unpaid receivables while increasing cash flow. Factoring also eliminates long payment windows! The consistent working capital received from factoring will help you survive the uncertainty of the supply chain and other economic factors. With over 30 years of experience J D Factors understands the needs of those in the transportation industry and we’re prepared to walk you through the type of receivable factoring that will make you feel confident in the face of today’s economic environment.

Promote Growth and Efficiency

This doesn’t mean that factoring is only for struggling businesses, rather, factoring is utilized by many flourishing organizations to promote growth and increase operational efficiency. The stable cash flow stimulated by factoring further increases your control as you can spend less time worrying about invoices and more time making the critical decisions that separate you from your competitors.

If you’re still hesitant to pursue factoring, you should know that not all of your invoices need to be factored! Together, we can decide how many invoices you’d like factored and the priority of each. With heavy supply chain demands, invoice factoring offers a lifeline of stability to companies within the transportation industry. Give our team a call to learn more.

Invoice Factoring for Fleets: How to Grow in the Transportation Industry

The transportation industry can be tough, even in times of great demand. There are so many variables, a large financial commitment for growth, and changing economic conditions to throw a wrench in the best laid growth plans. One of the top things you can do to make your fleet more successful is to use factoring for at least some of your invoices. If this comes as a surprise to you, you’ll be interested in the data from RigDig Business Intelligence, which shows that since 2017, and especially during the Covid-19 pandemic, fleets that use at least some factoring have been outpacing those that don’t. 

Here’s the data, and why we think invoice factoring plays such a pivotal role in supporting the transportation industry specifically.

Fleet Growth Over Time

From 2016 to 2020, the size of fleets that use some form of invoice factoring has grown by 90%. In the same time period, the size of fleets that do not use any factoring has only grown by 30%. This is on average, so individual companies will have grown more or less depending on their circumstances. Still, the overall impact of factoring is clear. Transport companies that use at least some invoice factoring can better leverage opportunities to grow.

Why Is Invoice Factoring Successful?

Transportation is one of the industries that can benefit from invoice factoring the most. You have small margins and very long lead times. Potentially, your clients may take 30 or even 90 days to pay you, and that is after the delivery is completed.

When you’re trying to complete a new order, you may need to make investments and then wait for the cash to reach your pocket for even six months from the time you first wrote an estimate. In the meantime, you need fuel, payroll, and the cash to cover your other operating expenses. Putting business from more reliable customers on hold to handle large new accounts can jeopardize the stability of your business overall.

With all of these challenges to growth, and even day-to-day stability, invoice factoring is an excellent solution. After the delivery is complete, you send out your invoice to a factoring company like J D Factors. We pay you within 24 hours, meaning that you immediately have the cash to cover expenses incurred in the delivery, and keep investing for the next ones. That cuts you down from 90 days to one and keeps your business running smoothly.

Invoice factoring gives you better cash flow, which means that you can take advantage of opportunities that pop up, whether it’s a new fuel card, an order from a new client, or making new investments in quality trucks.

Cash flow isn’t the only benefit. Your factoring company will deal with invoicing your client and receiving payment. That means you spend no time chasing accounts receivables, reminding people about payments, or sending out ignored emails and calls. In fact, with non-recourse factoring, you are protected further against clients who don't pay because of credit issues, stop answering your calls, continuously break promises, or even file formal bankruptcy or bankruptcy protection. You reduce your burden of bad debt and have a significantly more stable business. Looking for an advantage this year? Discuss invoice factoring options for your transportation company with the team at J D Factors.