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Should Your Transportation Company Choose a Bank Loan or Factoring?

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Should Your Transportation Company Choose a Bank Loan or Factoring?

One person, small and medium-sized transport companies fully understand the problems of organizing sufficient cash flow when gas must be paid for, drivers accounted for, and customers are always wanting to pay as late as possible. Instead of using traditional bank loans, could your company benefit by discussing how to improve your cash flow with transportation factoring companies?

Bank Loans Have Many Options

Banks may not wish to offer your transport company a short-term bank loan because of the difficulties you have in getting your customers to pay on time. The bank will be worried that you may not be able to meet the ongoing demands of a monthly repayment.

They may also be concerned that your cash flow will suffer when your customers take several months to pay you, and that will affect how you can repay your bank even when you use an overdraft plan.

Working with transportation factoring companies may be a great advantage to your business.

Because they assess the risk based on your customers and not your own business, they may be able to advance your cash flow considerably.

Transportation factoring companies understand the industry and the relationship between customers, the company, drivers and cross-country deliveries.

Understanding the necessary risks helps a factoring company make decisions about which of your customers will be able to be assessed favorably.

When you compare a bank loan with a factoring option, you may not be able to achieve a bank loan because you may not qualify. Being a company with good credit ratings a bank is difficult, and when your cash flow has serious problems, a factoring company may be your best opportunity.

There are many advantages from using factoring companies to provide you with an enhanced cash flow.

You won’t need to take on additional debt and make payments beyond the capital borrowed. You’ll receive the money quickly and will save income and expenses by not needing to collect from your customers.

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