Amid the credit crunch, companies from various industries are discovering the potential benefits of considering their debts. However, there is at least one industry where accounts receivable factoring is not necessarily up to date: transportation. Transportation companies have used factoring services for years. You can explore more about trucking companies in the Midwest through https://www.jetttrucking.com/.
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The biggest challenge for new and emerging auto companies is cash flow management. How do you ensure that the money you receive matches the money spent? For the owners of most automotive companies, this is their biggest challenge.
Factor Services: a reliable alternative
Most business owners rely on bank lines of credit to get the money they need until they get the money. However, this can create a dangerous situation because lines of credit are more difficult to obtain at present. Many companies with lines of credit have seen them canceled or cut by the bank with little or no explanation or warning.
Although banks can provide lines of credit to auto companies, companies need to build a history of profitability. Also, the bank will consider the company's profits as a source of payment first, then the company's equity or net worth, and then the liquidation of the owner's assets, especially real estate.
Many transportation companies have found receivable factoring to be a reliable and effective alternative to bank lines of credit to help finance working capital shortages.
Factoring services are common in the automotive industry, as their qualifications are highly dependent on transportation company customers. Factor performs in-depth credit reviews of all customers and primary monitors until the bill is paid.