In a challenging freight market, trucking companies need to be extra cautious who they work with and how they can protect themselves from losses. The news of several recent bankruptcies, business closures, and financial instability amongst a few large logistics companies reinforces this.
Here are a few of the most recent bankruptcies in the freight industry to be aware of.
August 7, 2023 – 91 year old Yellow Freight Corp files for bankruptcy including its freight brokerage division Yellow Logistics. The company has been losing revenue and profitability for a number of years. 30,000 workers lost their jobs.
October 18, 2023 – 8 year old Convoy Inc. abruptly shut its doors despite substantial backing by Jeff Bezos, Bill Gates and others. Convoy’s 2022 revenue was $106.8 million with 1,500 employees. Here are more details on the closing of this freight company.
October 28, 2023 – 12 year old SEL Supply Chain Solutions of Ft. Worth unceremoniously shut its doors. At its height of operations, the company had 150 employees with 45 independent agents and revenue of $64 million in 2022.
October 31, 2023 – Despite revenues of $2.5 Billion with 2,600 employees S&P further down-graded Echo Global Logistics’ credit rating, from a B to a B-. This pushes the credit rating of Echo Global, which was acquired by The Jordan Co. two years ago, further into non-investment-grade territory.
How Can Owner-Operators Protect Themselves?
Non-recourse factoring protects you from customer bankruptcy. This means that if your customer files for bankruptcy, you are not responsible for paying back the factoring company for the funds advances on invoices that they have purchased from you.
This is a major advantage of non-recourse factoring, and it is one of the main reasons why many businesses choose to use it. Customer bankruptcy can be a devastating event for a small business, and non-recourse factoring can help to protect you from this risk. Of course, non-recourse factoring requires credit approval, so it may not be available to all businesses.
Benefits of Non-Recourse Factoring
Here are some of the key benefits of choosing non-recourse factoring to help your business:
- Protection from Customer Bankruptcy: As mentioned above, non-recourse factoring protects you from customer bankruptcy. This can be a major lifesaver for a small business, as customer bankruptcy can be a devastating event.
- Improved Cash Flow: Factoring can help to improve your business cash flow by providing you with immediate access to the cash that is tied up in your accounts receivable. This can be helpful for businesses that need to cover operating expenses or invest in growth.
- Reduced Risk: Non-recourse factoring can help to reduce your overall risk by transferring the credit risk of your customers to the factoring company. This can free up your resources so that you can focus on growing your business.
If you are considering using factoring to improve your cash flow and reduce your risk, Riviera Finance has been providing non-recourse factoring since 1969. Your invoices are your most valuable asset, protect that asset by contacting Riviera Finance today.
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