A History Of Factoring In The Trucking Industry The trucking industry has been utilizing methods for invoice factoring as far back as the late 1940s, post World War II. It was at this time that roads and highway systems in the west were expanding and making significant improvements. Trucking then started to become a vital part of North America’s supply chain network and transportation companies enjoyed an increase in funding from both banks and independent firms that provided easy access to financial agreements. While the industry continued to evolve through to the 1980s, the sheer volume of freight businesses grew, as did the competition. In response, freight rates and interest rates from banks went up; acquiring lines of credit to fund initiatives also became more difficult. This made it particularly challenging for startup businesses to secure the finances needed to operate. For many couriers, invoice factoring became the most readily available, if not the only viable cash flow solution. The more invoices a company issues, the more using factoring will generate flow of monies back into their business through automatic financing. Factoring is also directly linked to a company’s sales, the harder the company works, the more access they have to cash without relying on a customer’s prompt turnover of payment. This ensures startup …show more content…
In order to move supplies, companies must maintain their fleets, ensure they can pay for the gas that powers them, and pay their employees on time. This requires high capital investments that can only be made when there is a steady and reliable cash flow solution. When in recent years, banks have become hesitant to approve transportation companies for sufficient credit, factoring provides an alternative and cost-effective strategy for financing. Because it is not a loan, the simple structure holds numerous benefits that favours business