Enduring The Credit Crisis

A common theme in recent news about the U.S. economy is the tight credit market and the unwillingness of banks to lend money, even to credit worthy debtors in some cases. We see in the news more and more banks dealing with unmanageable levels of bad loans, and many banks being shut down by the Feds. So the question arises, what should trucking companies do about financing their business?

If trucking operators thought obtaining financing was difficult prior to the last year or so, they would undoubtedly be shocked at how difficult it is for trucking operations to obtain traditional financing from a bank in today’s tough economic times. There is, however, an alternative to traditional bank financing for trucking companies. The alternative is invoice factoring, or often referred to as invoice discounting.

Invoice factoring is a financial transaction where the trucking company sells its invoices or receivables to a financial institution called a factor. The factor purchases the invoice at a discount, and earns his fee when the payment is received from the trucking company’s customer. Freight bill factoring is not only a good choice for many trucking companies, but may be the only option for some trucking companies.

Although some factors may have bad reputations and not treat their clients and debtors appropriately, most factors are very professional and give trucking companies and their customers the respect they deserve. A good place to look for a factor is at a site called Best Invoice Factoring. This site is a directory of factoring companies that can be identified either by location or industry specialty. This is definitely a great resource for truckers who want to start looking for a factor.

Truckers and Credit Cards: Matching Expenses With Cash Receipts

Most small and mid-sized trucking companies deal with cash shortages at one time or another. These cash “crunches” are partly to blame on a trucking company’s expenses being paid before it is able to collect its cash from its customers. In accounting there is a principle called the matching principle. The matching principle is the concept that when accounting for a business’ financial transactions, the expenses and revenue for a specific transaction must be reported in the same accounting period. By following this principle, you get a true picture of a company’s profitability, or lack thereof.

When analyzing the cash flow challenges of a typical trucking, you quickly realize that much of the problem is that truckers pay for many of their expenses immediately even though they have to wait for 30 -60 days to receive payment from their customers. Although this blog will focus on accounts receivable factoring as a primary method of accelerating cash flow, there are other solutions to helping deal with the mismatched timing of cash disbursements and cash receipts. One such solution is using credit cards to make business purchases.

Trucking companies should look at the many benefits of using a credit card for many of its daily expenditures such as fuel and maintenance. Using a credit card buys you more time to pay for your expenses because most credit card companies give you a grace period in which to make your payment without incurring any finance charges. This allows you to more closely match your expenditures with your collections. Additionally, many credit cards are offered as reward credit cards that give you benefits such as discounted gas, travel rewards, free merchandise and much more.

Many people have long been aware of the rewards you can get from a credit card, as well as the many reasons you may want a credit card, such as applying for a student credit card for your college student. However, many small business owners have yet to realize the benefits a credit card can offer their business. So go ahead and find the best credit card for your business and put it to work for you.

Trucking Conference

The American Trucking Association is scheduled to hold their annual conference and exposition October 4-7, 2008. The conference and expo will be held in New Orleans, LA. The ATA scheduled list of guest speakers and expo exhibitors plan to tackle the issues of the economy, fuel costs, new technologies, and how to be profitable in tough economic conditions. The conference plans to address how to boost fleet fuel efficiency, address the latest on the 2010 engine emissions standards, improve driver recruitment, and take a “green” approach to trucking.

“The current economic environment and the upcoming Presidential election make ATA’s 2008 annual convention all the more important for our motor carrier members,” said ATA President and CEO Bill Graves. “This event is designed to deliver strategies and solutions that will help fleets face today’s current operating challenges and thrive.”

In light of the challenges faced by trucking companies in today’s strained economy, the information offered up at the ATA conference is bound to be beneficial to all trucking companies. Although many fleet operators have found ways of dealing with the high cost of diesel fuel, as well as the slow down in cargo shipments, I am sure that new strategies will be introduced to help deal with these challenges even better.

Freight Bill Factoring

If you are reading this blog post, congratulations on finding one of the newest information resources on the invoice factoring industry. I am a certified public accountant and have many years of experience in the accounting, financial serivces consulting, and factoring industries. We wanted to start this blog to provide information to the truckers all across America, many of which are my friends, about invoice factoring and how it can be an effective financial resource for your business.

We will comment on developments within the factoring industry, transportation industry news, as well as general market conditions impacting the trucking industry. This will include some commentary on the geopolitical news relative to oil prices and the impact of the housing market slump on the trucking industry.

We hope to keep this blog informative, educational and entertaining. So check back often and see what we are saying about some of the issues that impact America’s trucking businesses.