So you’ve decided to start your own transportation business. You’ve taken all the right steps from getting the proper licenses to drafting your business plan and your business has taken off. As you gain more and more customers, your cash flow struggles to keep up.
How do you keep up with your growth?
The one solution, that often scares business owners, is alternative financing. New business owners see alternative financing as something that will only add debt to their name, but this is not the case. With alternative business financing, like transportation factoring, you will be able to secure only the cash owed to your business – giving you credit insurance.
Why does your new transportation business need transportation factoring? We have compiled a list of characteristics of new transportation businesses and how factoring can be used to better them below.
You Lack Credit History
As a start up, you lack credit history. It’s not something that you can avoid, it’s just something that comes with being a new business.
Because of this, getting financing from a bank will be nearly impossible. A bank requires years of strong financial history to qualify for any type of loan. With transportation factoring, a factoring company purchases your outstanding invoices to advance up to 96% of the invoice with low rates. To qualify for this form of financing, the factoring company will look into the credit history of your clients, rather than your own.
As you can see, this helps businesses with little to no credit get financing without risk to their name.
You Look To Credit Cards
Many new business owners, that don’t know about transportation factoring, look to credit cards to build their credit faster. In some cases, business owners can get a credit card in the business’s name, but most of the time, it is a personal account.
This isn’t something that you want to get yourself or your business involved in. This blurs the line between your own personal finances and your businesses, making it more difficult for you to properly file taxes and manage company expenses.
You Run Out of Initial Funding
When you started your transportation business, you may have taken out a small business loan to get the ball rolling. As your business grows larger and larger, you begin to eat up all of that funding – and fast. Before you know it, you can be completely out of cash and struggling to keep your customers happy.
With transportation factoring, you can easily keep up with your growth. By allowing a factoring company to purchase your outstanding invoices, you will be able to secure a strong source of capital for your business. Transportation factoring will give you a cushion to fall back on when you start taking on more clients, or even hit a slow period.
As a new business owner, there are many things that you have to tackle. Your business’s finances are crucial for the success of your transportation. Utilizing the many benefits of transportation factoring can help your business catapult itself in line with other major competitors.