Trucking Company Expansion
When a trucking company has a good record of paying the bills on time, plus a well-deserved reputation for satisfying customers while maintaining a credible safety record, it may be time to explore growth opportunities. Opportunities for expansion may exist in the area that the company already serves, which may have good economic prospects for future growth, or by branching out into surrounding areas.
The company may need more trucks, or if it relies on owner-operators it would need to recruit more of them. While the trucking company may have unlimited growth opportunities within it’s own state, venturing across state lines may require more licensing and inspections. Transportation financing may be needed at this stage, as even if the company has ready cash reserves it may be best to keep them in the bank for unforeseen problems. Having access to a lender that will provide funds when needed is a great tool to have ready before beginning any expansion project.
Financing invoices may be one way to raise transportation financing without applying for a bank loan, as the trucking company sells it’s accounts receivable invoices directly to a third party, who then collects from the customers. Purchase order financing is another way in which a trucking company might obtain funds for expansion, which involves a third party advancing money against a purchase order for products, and that money being used to manufacture the products.
Invoice factoring, which is another name for financing invoices, is a simple way to maintain continuous cash flow throughout the year for a trucking company. The trucking business is prone to the detrimental effects of economic dislocations, weather conditions, driver shortages, equipment breakdowns, and other factors which are often beyond the control of management. Purchase order financing can provide a way continue cash flow for transportation companies that cannot wait 90 days or more for customers to pay their bills.