With Credit Requirements Tightening, Trucking Companies Face Financing Worries

By December 5, 2019 December 6th, 2019 Factoring, Trucking Information
credit requirements

The trucking industry has received the advantages of relaxed credit requirements for years now. If one thing became evident after the big recession of 2007 it was that our economy relies on the trucking industry to move goods, help construction and disaster relief in major cities, and assist every other sector in generating revenue. However, current economic trends are pushing traditional channels to tighten credit requirements on trucking companies, which has many fleet owners wondering how they will secure the financing they need to thrive and grow.

Credit Requirements, Debt, and Interest Rates

While many experts are pointing to this year’s lowered revenues in the trucking industry as the main reason why lenders are tightening credit requirements, that is only part of the picture. Impending tariffs which have been pushed back until after next year, along with pressure from the Fed, have lenders raising their requirements and making it tougher for trucking companies to get the financing they need. Demand from shippers is also more relaxed this year, even though the trucking industry as a whole is performing at a pace that is more in-line with 2017 than 2018, which was an outlier. Additionally, in the current economic climate, trucking companies are hesitant to take on unnecessary debt at unpredictable interest rates to thrive and grow.

Finding a Better Alternative

Currently, trucking companies are placing a focus on working capital over debt-based financing. No one can say for certain what 2020 will bring, so taking a chance with rising credit requirements is taking a back seat. To boost cash flow and build working capital reserves, trucking companies are using invoice factoring. Invoice factoring converts unpaid receivables to cash with a single business day, so trucking companies aren’t waiting a month or longer for shipments delivered today. By increasing cash flow and building up working capital, trucking companies can reduce their reliance on debt-based lending, preserve or build their credit ratings, and grow their operations from within, on their own terms.

Single Point Capital provides invoice factoring for trucking companies of all sizes. Our factoring services deliver cash for unpaid invoices on the same day, and we provide free credit checks on your clients. You choose which invoices to factor, so you can manage your accounts easily and build up the capital you need, reduce the need for debt-based loans, and make 2020 a successful year.

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