June 12, 2022

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The complete guide to truck factoring

Trucking is a lucrative industry. In fact, there are many drivers in the United States that make $80,000 per year or more, but the money does not always come that easily.

When you haul or deliver a load, the receiver signs an invoice. Unfortunately, this does not mean you get paid instantly since an invoice is nothing but a piece of paper that indicates that the goods have been received and the owner intends to pay the trucking company or the independent trucker. Truckers or trucking companies have to wait 2-3 months, sometimes, if lucky, a few weeks, to receive payment for goods delivered.

Owner operators control their own finances, bills, maintenance of their trucks, fuel for transporting the next load, and having a business to run can’t wait that long to get paid for goods already delivered, and trucking companies have to be mindful of their truck driver turnover rates and what they can do to stop or reduce them.

One way that both trucking companies and owner-operators can overcome these barriers is by using truck factoring services.

What Is Truck Factoring?

Truck factoring is an arrangement between a company and a third party company where the third party company will provide cash advances to the company based on future expected credit card receipts from the customers of the business. This service or process helps both independent truckers and trucking companies. Instead of relying on bank loans or credit cards, they get paid instantly.

Truckers are able to take advantage of this service because it provides them with immediate cash flow without having to wait for customers to pay them back before they get paid.

This service allows truck drivers to be more successful in their job because they don’t have to wait for customers to become more profitable.

Some of the advantages truckers have with this service include being able to make a quick turnaround on their money; finding loads easier because they don’t have to worry about covering expenses in advance; and being able to take advantage of better rates and payment terms.

Freight Factoring: Pros & Cons

The services a freight factoring company offers definitely have their advantages, but they also have their disadvantages. So what are the pros and cons of freight factoring?

PROS

Swift and easy access to funds

It does not matter if you are an owner operator or own a large fleet of vehicles, you can use the services of a financing company at any time. The funds are available and disbursed within hours of invoice approval.

A good credit score is not necessary.

A factoring company, unlike a bank, does not give loans; you sell your invoice and get paid, so having a bad credit score does not restrict you from using their services.

Back-office assistance

Your freight factor will help you with all the back-office work. All you have to do is focus on running your business.

Potential customers’ credit checks are free.

Working with factoring comes with the perk of knowing if your potential customer has a good credit score before agreeing to deliver a particular load.

CONS

It is not free.

Factoring invoices isn’t free. You can get your payment easily without the wait of 30–60–90 days, but for these services, the factoring company or the facor charge you a small percentage of the total amount on the invoice.

High rates

We do know that factoring companies collect fees for their services. This is typically 1–5% of the total invoice amount, but depending on the factor, the fees may vary.

You can learn more about the pros and cons of factoring here.

The Top 4 Freight Factoring Companies For Truckers

Truck drivers should consider factoring because it is an affordable way for them to get the cash that they need to maintain their fleet and keep themselves on the road. Truck drivers who factor can also take advantage of tax benefits, which means that they can save more money than if they were paying taxes on all of their revenue.

FOUNDING IN 24 HOURS

FUEL CARDS

2.99%

FOUNDING IN 24 HOURS

FUEL CARDS

3.04%

FOUNDING IN 24 HOURS

FUEL CARDS

3.08%

FOUNDING IN 24 HOURS

FUEL CARDS

2.19%

Why Choose Fleetcare for Invoice Factoring?

Fleetcare is a dispatch company dedicated to helping truck drivers, owner-operators, and small fleets. There are tons of reasons truckers choose our company and the factoring services we offer.

At Fleetcare, we value our customers’ growth as it is our goal to make sure our clients get the very best, stress less and gain more. Yes, here we are focused on protecting our customers’ profits.

With our vast network of trustworthy factoring companies and a large team of experts with a vast knowledge of the trucking industry, we make sure to help our customers find the best freight factoring rates for their loads.

If you’re ever confused or unclear about the whole process, we have a team of full-time customer service staff that are always in touch and ready to help our customers with any issue. We can provide 24/7/365 coverage. Our coverage ensures that we can handle any problem that may arise for any customer anywhere at any time.

Having this standard policy in place with our services in our company, we already have many customers who have used our freight factoring services, and they are taking advantage of the opportunities that freight factoring services provide (i.e., improving and boosting their businesses, financial flexibility, and stable financial planning).

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