Are you anticipating the surge of peak shipping and freight season?
For importers, non-vessel operating common carriers (NVOCCs), and drayage operators, securing fast funding before this crucial period is not just a strategic advantage; it’s a necessity for ensuring operational readiness and capitalizing on the increased demand.
This article explores several rapid financing options available to these key players, offering a roadmap to financial stability and growth.
Immediate Cash Solutions
As peak season nears, it helps to research as many quick financing solutions as possible. For example, private money loans, also known as hard money loans, allow borrowers to use properties as collateral for faster cash infusion. Griffin Funding is one example of this avenue.
The NVOCCs and drayage operator sector often deals with extended payment cycles from clients. This is where freight factoring can be a powerful financing tool for peak season.
Freight factoring allows operators to sell unpaid invoices (accounts receivable) to a factoring company for an immediate cash advance. The factoring company collects the full amount from the client, with operators receiving the remaining balance minus a small fee.
Factoring is a popular option in the industry for its speed and accessibility. Operators receive a quick injection of working capital to cover such immediate expenses as:
- Fuel
- Payroll
- Equipment maintenance
Another appealing aspect of freight factoring is that it’s based on the creditworthiness of the operator’s clients, not the operator itself. This funding option allows trucking companies to take control of their cash flow. It puts companies in a better position to accept more loads and expand their services without the obstacle of waiting for payments.
Inventory Financing and Purchase Order Financing
Importers must acquire and hold large volumes of goods to meet peak season demand. Inventory financing allows businesses to use existing inventory as collateral for a loan or line of credit. Operators can access funds without a long credit history, which is beneficial for new companies.
This is a good option for importers who need to purchase and stock seasonal or raw materials well in advance.
Next is purchase order (PO) financing. This method helps companies secure inventory quickly when they don’t have sufficient cash on hand.
Third parties pay suppliers directly for the purchase orders. Once the goods are sold, borrowers repay the third parties.
This type of financing is particularly helpful for companies with fluctuating cash flow, allowing them access to capital for other essential peak season expenses.
Supply Chain Financing
Your sector plays a key role in managing supply chains across industries. You can also leverage supply chain finance (SCF) to generate essential capital.
Under this model, third parties pay suppliers on behalf of importers. Suppliers get paid quicker, while importers extend their payment terms. This model strengthens supplier relationships, improving cash flow management across the supply chain.
Prepare For Peak Season
By leveraging these fast funding avenues, you can proactively meet peak season demand and optimize operations. Get a clear financial picture first to have a better understanding of your borrowing and payment capacity; this is essential for maintaining strong business relationships and financial health.
