Factoring companies for trucking
As the owner of a trucking company, you’ve probably encountered your share of challenges. From driver shortages to variable costs like fuel and tolls, the industry can sometimes be a bit unpredictable. One of the biggest challenges faced by trucking companies, though, is waiting to get paid. You could potentially wait for weeks to receive payments from your customers. This can cause cash flow issues that prevent you from growing your business or even covering operating expenses.
Fortunately, there’s a way to get paid quickly to keep cash flowing into your business. If you have unpaid invoices, give invoice factoring a try.
You can have access to instant (or near-instant) cash instead of waiting 30, 60, or 90 days for your customers to pay. But what’s the catch? In this post, we’ll take a look at invoice factoring for trucking companies. We’ll discuss how it works, who qualifies, and the top lenders in this space. Whether you operate a fleet, are an owner-operator, or are involved in the trucking industry in another way, invoice factoring could give you the capital your business needs.
What Is A Factoring Company For Trucking?
Tired of waiting for your pay? Freight factoring may be the answer. Freight factoring means that you sell your invoices after loading, hauling, and delivering freight. Instead of waiting days — or even weeks — freight factoring puts cash in your pocket instantly without having to wait for your invoices to be paid.
In the trucking industry, it’s common to invoice customers. Even after the freight is loaded and delivered, your company must still invoice the customer. Depending on your payment terms, it can take weeks or longer to get paid.
Unfortunately, there are times when outstanding invoices cause problems for your business. If you have multiple invoices that haven’t been paid, your business isn’t bringing in revenue. A lack of cash flow can spell trouble for trucking companies — after all, you still have bills to pay. Luckily, invoice factoring (or freight factoring) for trucking companies gives you instant (or near-instant) access to outstanding funds from your unpaid invoices.
A factoring company for trucking pays you for your unpaid invoices in exchange for a small fee. Here’s how it works.
You sell your unpaid invoices to a factoring company. The factoring company pays a percentage of the value of the invoices to you immediately (typically within a few business days). The percentage you receive upfront varies but typically hovers around 85%. Next, the factoring company takes over in collecting payments on the purchased invoices. Once payments are collected, the remaining funds — minus a small fee, known as a discount rate — will be released to you.
The benefits of invoice factoring are that you no longer have to wait 30 days, 60 days, or even longer to receive payments from your customers. You also (in most cases) won’t have to worry about your personal or business credit score, putting up collateral, or meeting qualifying factors that play into other types of small business funding. Most factors consider the quantity and quality of your invoices when determining approval.
However, there are also a few drawbacks to note. Most companies charge a discount rate between 1% and 6% of the total value of your invoices per month. The longer your customers take to pay, the more this type of funding will ultimately cost your business. Like other forms of funding, it’s important to weigh out the pros and cons. While invoice factoring for trucking companies can get expensive, the cost may be worth it if your business is facing cash flow challenges.
Unsure if invoice factoring is right for you? Check out our post A Basic Introduction To Invoice Factoring For Businesses to help you make up your mind.
The Best Trucking Factoring Companies
We’ve found the best factoring companies for trucking that can help you get the funds you need for your business. Fleets, owner-operators, and other trucking companies can resolve cash flow issues by selling their unpaid invoices to one of these recommended factoring companies: Riviera Finance, Bluevine, Fundbox, and Lendio.
- Riviera Finance: Best For Non-Recourse Invoice Factoring
- BlueVine: Best For High Credit Facilities
- Fundbox: Best Asset-Backed Line Of Credit
- Lendio: Best For Comparing Lenders
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