The first quarter of the 2020 calendar has Brough unprecedented economic challenges to businesses of all size. The initial fear, and then realization, of the economic threat of the pandemic has, in fact, served as the biggest economic challenge that this nation has faced in decades. Central to the well being of the nation, of course, is the delivery of goods. From the medical masks, gloves, shields, and ventilators that health care workers need to the canned foods, toilet paper, and cleaning products that consumers demand, there is an enormous need for the timely delivery of goods. And while many people acknowledge that scarcity is not the main issue, there are, in fact, delivery delays that are creating panic in some parts of the country.
Interestingly enough, at the same time that many trucking companies find themselves with higher demand than they have seen in the past, they are also seeing some of the lowest fuel costs as well. This combination of high demand and low fuel prices, however, does not necessarily mean that these transportation companies can realize all of the profits that the general public might think. The costs of purchasing new trucks, maintaining old ones, and having to pay for around the clock drivers to meet these demands comes with a high price tag. And while the potential for profit is great, the fact of the matter is that both large and small trucking companies face incredible expenses as they ramp up to meet the current consumer needs. Taking into consideration that many of the payments for the deliveries of these goods does not occur until 60 or 90 days later, you begin to understand the need that the transportation industry has for transportation factoring companies.
Business Factoring Services Help Many Companies Navigate the Challenges of Increased Demand
Businesses that are looking for a long term solution to the gaps that have between the delivery of goods and the payment for those goods realize that a revolving credit platform may be the best solution. By definition, invoice factoring is a type of accounts receivable financing that converts outstanding invoices due within 90 days into immediate cash for a small business. Also available to large businesses, these business factoring services are essential to the delivery of goods. Covering the current expenses, including the salaries of drivers who are being required to work longer hours and be away from home for more days in a row, trucking companies make use of advance business capital factoring options to bridge gaps while they wait for payments.
The adage that you have to spend money to make money is never more true than in an industry is tasked with meeting the often changing demands of consumer goods. With deliveries scheduled months in advance, for instance, the fact that even one single grocery store is seeing a more than 100% increase in the demand for products can be a challenge. Multiply this challenge by the thousands of grocery stores that are facing this these demands and you can picture the challenge that trucking companies are facing.
Consider these facts about advance business capital factoring services and the role they play in helping trucking companies meet current demand, as well as the size of the industry itself:
- The business factoring services advance most of the invoice amount, typically 70% to 90%, after checking out the credit-worthiness of the billed customer, according to the Wall Street Journal. The Journal goes on to explain that the bill is paid, the factor remits the balance, minus a transaction, or factoring, fee.”
- As a specific example, factoring companies can help small businesses bridge invoice payment gaps with upfront payments of as much as 90% of the original invoice.
- Bankruptcies in the U.S. increased to 25,227 companies in the second quarter of 2016, from 24,797 companies in the first quarter of 2016. The numbers of bankruptcies in the first quarter of 20220, however, will make the 2016 numbers seem small, especially if businesses do not take advantage of options like advance factoring shrives.
What are the challenges your business is facing during the pandemic? If you are a business that has access to business factoring services you may find that you are more able to weather the challenges that many businesses are facing.