A Guide to Factoring Services for Independent Owner-Operators

Owner-operators are often caught off guard when they find they don’t have enough ready cash to cover their costs. It is a predicament that most owner-operators find themselves in at some point. However, it is also a problem that can be easily solved. Little Mountain’s factoring services for owner-operators help you free up cash from your accounts receivable so you can carry on with business.

Why Independent Owner-Operators Need Factoring

Since most of your clients probably pay their freight bills in 30 to 90 days, you have to wait for your payments, even while you try to cover your day-to-day running costs. This situation can easily lead to cash flow problems, and often does. Unless you have a large cash reserve that you can draw on, your accounts rapidly diminish as you count down the days till you receive your next payment. The resulting cash flow problems can create considerable difficulties for your business. If you do not handle them properly, they could even put you out of business. This is where owner-operator factoring can come in and free up your cash flow with minimal effort required from you. 

How Factoring Services Work

Trucking factoring is exceptionally easy to get, Just fill out our online application form, and we will get back to you within 24 hours. Little Mountain is unique in that the company generates invoices for its clients, so the process is different than most factoring companies. We do not need to check your credit history, but we will check that of your clients to make sure neither of us loses money.  We will pay you an advance of up to 97 percent of their value on the same day. 

You can then continue with your operations as normal, and we will follow up to secure payment from your clients. Once we receive the payments for the invoices, we deduct a small fee for our services before paying you the outstanding balance. 

Key Benefits of Factoring for Owner-Operators

Factoring provides an easy way for owner-operators to secure and stabilize their cash flow. Consider the following key advantages:

Immediate Access to Capital

The biggest benefit is that factoring provides instant access to capital. Instead of waiting for your invoices to be paid, you can turn them into cash today. You will get an instant cash injection, which you can then use to fund your business and invest in its growth.

Improved Cash Flow Management

Factoring helps to make your cash flow more predictable and manageable. When you are waiting for payment on the usual invoice terms, it is likely to create fluctuating cash flow, where you have plenty of money one day but empty bank accounts a couple of weeks later. With invoice factoring, you can keep your cash flow steady and predictable, enabling you to plan your spending and business activities properly.

Enhanced Business Growth Opportunities

As a result of your ready, easy access to cash, you can plan for strategic spending on upgrades and growth opportunities. Many owner-operators find themselves unable to expand their businesses because they never seem have the cash. Invoice factoring can change all that.

Comparing Factoring Services to Traditional Financing

Factoring is not your only option when it comes to business financing. Some businesses consider applying for a bank loan. When weighing up the benefits of invoice factoring vs. bank loans, consider the following facts:

Bank loans entail a long, sometimes complicated application process. When you apply, you will usually need some form of collateral, you will need to demonstrate that you can repay the loan, and you will need to have a good credit score. In the end, your application may still be declined. With invoice factoring, the application process takes 24 hours at the most. You will not have to put up any collateral, and your credit score is not relevant at all. You will not incur any debt with factoring. All you have to do is sell your invoices to a factoring company. The factor then collects payment from your clients. You are simply turning the money you have already made into ready cash.

How to Choose the Right Factoring Company

When choosing a factoring company, always check that they have an understanding of your business. Select one that has been in business for a while and that works with freight companies, particularly those offering freight factoring services. Check reviews to see how other owner-operators have experienced their services. You should also be especially careful to examine their terms and conditions, as well as their fee structure. Make sure that there are no hidden costs involved and that everything is explained and disclosed upfront. 

Little Mountain is a factoring company based in Florida that serves freight businesses across the country. We have been providing reliable factoring services to trucking companies for many years. We do not believe in red tape, our terms are extremely flexible, and we charge fees when you decide to stop working with us. If you are looking for factoring services for owner-operators, contact us for more information on our services or fill out our online application form today.