Reason #3: C.O.D. – Cash on Delivery
We’ve already discussed Fuel Advances and Fuel Cards, and today’s topic, the 3rd of the “5 reasons why Factoring is so important to Truckers” and Trucking as an industry, relates to getting paid and that’s why I refer to it as “C.O.D. or Cash on Delivery”.
This seems obvious and for most trucking company owners, it’s the primary reason a company factors its invoices to begin with. But there’s much more to it than than, and here’s why.
In factoring, we commonly talk about “buying invoices” or “advancing against invoices”, but what we really do is provide “cash on delivery” or “C.O.D.” services to small trucking companies so that they can operate continually. The key word is “continually” because the cash provided “on delivery” allows a company to make a delivery, get paid, and turn around and do it again – over and over and over again.
Factors like myself, provide trucking companies the immediate cash they need to get started right away on the next job, just as soon as the previous one has been completed successfully. The benefits created by this are:
- Near 100% equipment utilization (i.e., trucks and trailers) – everyone knows that idle equipment is a loss of time and money
- Ample cash on hand to make payroll and all the other expenses related to day to day operations
- No business “down time” (i.e., loss of business) due to not having enough cash to take on the next job and operate continually and grow your business.
That’s why at ei Funding, I don’t think about factoring advances as a “wire transfer” or an “ACH payment”, but rather, what they really are: providing my clients CASH ON DELIVERY.
Trucking is very capital intensive – everything is paid upfront before the job is completed – gas, maintenance, repairs, food, etc., so getting your money immediately upon completing a job is literally, a business owner’s necessity. Most conventional businesses bill first and then begin the long wait to get paid – sometimes having to do double-duty of having to chase down payments. But factoring companies like mine, provide the critical service of “cash on delivery” freeing up the trucker to drive and deliver, continuously and profitably.
That’s why C.O.D. or cash on delivery is so important to small trucking companies and their owners, and working with a trusted factoring company to provide that service as a valued partner is basic to your trucking company success.