Financing Your Transportation Company Using Factoring Financing

Most transportation companies – carriers and brokers alike – will need financing at one time or another to be able to grow past the investment of the original owners. In part, this stems from the fact that the industry is very competitive and margins can be thin making it difficult to build cash reserves. Also, most shippers pay their freight bills in 30 to 60 days, which combined with minimal cash reserves can create cash flow problems.

Slow revenues and thin margins can create a dangerous combination that leaves transportation companies vulnerable to unpredictable events – such as a slow customer payment, a major equipment breakdown, quick payment demands from drivers or fuel increases. Well capitalized companies can handle these events simply by tapping into their cash reserves. But growing companies, or companies with minimal reserves, run the risk of running into serious problems.

You can certainly minimize these cash flow problems by optimizing how you manage your accounts receivable. For example, you should run credit reports to make sure you only work with shippers that will pay for their loads on a timely basis. Additionally, you should always make sure that all the proper paperwork (e.g. freight bill, bill of lading, etc) is in order. Lastly, you should consider offering discounts in exchange for quick payments. But this strategies do have their limitations.

Although optimizing your invoicing processes will definitely help, most transportation companies will ultimately need business financing to be able to grow and succeed. Usually, company owners will approach their local institution to try and get a business loan. However, getting a business loan in the transportation industry is very difficult for carriers and nearly impossible for brokers. Furthermore, institutions will usually require that the company present three years of pristine financial records. Also, they will only work with companies that have substantial collateral and whose owners have a solid net worth. Ultimately, few transportation companies will be able to meet this criteria.

However, there is a new alternative way to finance transportation companies that has been gaining traction in recent years. It’s called freight bill factoring. Factoring accelerates the cash that is due to your company from slow paying freight bills. It provides the quick liquidity you need to pay for company expenses – such as drivers, fuel and repairs – without having to worry about the timing of your shippers payments.

Freight bill factoring transactions are usually structured as two advances against your freight bill. The first advance usually averages 90% and is paid as soon as the load is delivered and invoiced for. The second advance, which is the remaining 10% less the fee, is paid once the shipper pays the invoice in full. The factoring fee varies and is calculated based on the credit quality of your shippers, the size of your advances and the volume of invoices that you factor.

Perhaps one of the most important advantages of using freight factoring to finance your transportation company is that it’s easier to get than most conventional forms of business financing. Since factoring companies are funding your invoices – they view them as your most important collateral. To qualify, it’s very important that your shippers, who pay your invoices, have very good commercial credit ratings. Also, your invoices must be free of any encumbrances created by tax or legal problems.

Freight bill factoring is also very flexible. Most conventional business financing solutions , like lines of credit or business loans, have fixed ceilings. Factoring lines tend to have ceilings that are directly tied to your sales. This means that the line can grow along with your company, provided that you are selling to shippers that have solid commercial credit ratings. This makes freight factoring an ideal solution for small and medium sized transportation companies that have substantial growth opportunities but don’t have the cash flow to execute on their growth plans.

Day Trading Timeframes – Select The Best Timeframe To Meet Your Objectives

Maximum profits in the shortest possible timeframe is generally what most traders are chasing when Day Trading CFDs. My job here will be to assist you in picking the best timeframe for your CFD day Trading goals.

How to choose the right timeframe

If you are to have any sort of success when Day Trading CFDs then you will need to use several timeframes on your charts for ideal entry conditions. Maximising your entry will stem from using a short, medium and long term chart to focus on the best entry on your time frame.

You might decide to trade off an hourly chart and use a daily and 4 hourly chart to help identify your high probability trades. CFD Day Traders need to work hard on finding the most appropriate short, medium and long term setups to ensure their success.

Locking in wins twice the size of your losses

The best traders understand how vital it is to monitor how big their wins are compared to their losses and this is commonly known as the risk and reward ratio. Most short term CFD traders fall into the trap of having a low risk to reward ratio of 1:1 or less.

Traders with a even risk reward ratio of 1 to 1 must win more than 60% of the time in order to achieve a profitable edge. A huge emphasis of late has been the promotion of Forex Robots like Forex Megadroid or FapTurbo which claim win rates in excess of 90%.

Most high win percentage trading systems have large losses which can devastate the account when they occur.

Put your focus here when Day Trading Contacts for Difference

Overtrading is one of the greatest challenges day traders face. If you are sitting in front of the computer, there is always a compulsion to want to be ‘busy’ and begin placing trades that may not meet your entry criteria.

Your focus therefore should be to look for high probability set ups that allow you to ensure your wins are at least equal to or greater than the size of your losses. Overtrading is a serious issue among short term traders and usually only serves to help line the pockets of your broker.