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  • Casual Articles - Freight Factoring for Canadian Transportation Companies and Brokers

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    The Canadian transportation industry is very cash flow intensive. Truckers and brokers have a number of recurring expenses that place demands on their cash flow. They must pay drivers, repairs, fuel and other suppliers. In the meantime, they usually need to wait anywhere between 30 and 60 days before their freight bills are paid. This creates a financial perfect storm. They must pay expenses quickly – but wait to get paid themselves.

    Many transportation business owners go to their local (or national) bank to try and obtain business financing. They soon find out that getting a business loan is close to impossible. Banks place a number of requirements on their clients, such as having many years of profitable operations, being able to provide audited financial statements and having a business plan. Of course, if a trucking company or brokerage could provide three years worth of audited financial statements, they probably wouldn’t need fi

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    rs, fuel and other suppliers. In the meantime, they usually need to wait anywhere between 30 and 60 days before their freight bills are paid. This creates a financial perfect storm. They must pay expenses quickly – but wait to get paid themselves.

    Many transportation business owners go to their local (or national) bank to try and obtain business financing. They soon find out that getting a business loan is close to impossible. Banks place a number of requirements on their clients, such as having many years of profitable operations, being able to provide audited financial statements and having a business plan. Of course, if a trucking company or brokerage could provide three years worth of audited financial statements, they probably wouldn’t need f

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    pay expenses quickly – but wait to get paid themselves.

    Many transportation business owners go to their local (or national) bank to try and obtain business financing. They soon find out that getting a business loan is close to impossible. Banks place a number of requirements on their clients, such as having many years of profitable operations, being able to provide audited financial statements and having a business plan. Of course, if a trucking company or brokerage could provide three years worth of audited financial statements, they probably wouldn’t need f

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    t that getting a business loan is close to impossible. Banks place a number of requirements on their clients, such as having many years of profitable operations, being able to provide audited financial statements and having a business plan. Of course, if a trucking company or brokerage could provide three years worth of audited financial statements, they probably wouldn’t need f
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    financial statements and having a business plan. Of course, if a trucking company or brokerage could provide three years worth of audited financial statements, they probably wouldn’t need financing.

    Fortunately, Canadian transportation companies have an alternative to conventional bank finance. The alternative is called freight bill factoring, a special type of factoring financing.

    The biggest challenge for transportation companies is waiting to get paid by customers. Freight factoring provides an advance of up to 90% on slow paying freight bills. This cash advance allows the transportation company to meet business expenses, and provides relief from slow paying clients. The transaction is settled once the end customer pays the freight bill.

    The cost of factoring can vary between 1.5% to 5% per month, depending in the financed volume and the credit quality of the payers. Although it’s a cost effective solution that can hel

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