Freight Invoice Factoring:

Freight Invoice Factoring is a financial service provided by Banks and Lending Companies that allow trucking companies to sell their unpaid invoices to a factoring company for immediate cash.

The definition of “immediate” varies from factoring company to factoring company. As soon as a load is delivered, the Driver will electronically submit the POD, Rate Confirmation & any other Required Paperwork to the Factoring Company.

By doing this the Owner Operator generally gets paid by the Factoring Company the next day and doesn’t have to wait for 30 to 90 days to get paid by their customers.

 Invoice factoring for delivered freight can help trucking companies improve their cash flow, cover their expenses, and grow their business. 

Recourse vs. Non-Recourse:

Factoring invoices can be either recourse or non-recourse, which means that the trucker may or may not be liable for unpaid invoices. Recourse factoring is more common and cheaper, but it also exposes the trucker to the risk of bad debts.

Non-recourse factoring is less common and more expensive, but it also protects the trucker from the risk of MOST BUT NOT ALL bad debts, again read the fine print of your Contract.

Some of the benefits of invoice factoring for trucking are:

• • You can get paid within 24 hours of delivering your load (Usually Overnight), which can help cover expenses like fuel, maintenance, payroll, and taxes.

• • You will be required to run Credit Checks on Brokers or Shippers for every load you book. This requirement is what I consider to actually be the top benefit of factoring,
•  
  • In my personal opinion, I believe that doing Credit Checks off Load Boards (despite what they claim), or 3^rd party Credit Check Websites is not the most accurate way to check Brokers or Shippers Credit Ratings.

• • You can avoid taking on debt or giving up equity in your business.

• • No need to invest in credit, collection, and accounts receivable staff, which can save time and money.

• • Ability to take advantage of supplier discounts and special buying opportunities for prompt payment, which can lower costs and increase profits.

Some of the drawbacks of invoice factoring for trucking are:

• • You must pay a fee, usually a percentage of the invoice value to the factoring company. Normally these fees run between 2.5% – 6% depending on your Credit Score. Those owner operators that are lucky enough to have premier credit can find factoring services that will charge you as low as 1%.

• • Factoring invoices may not work for all business models or customers. Some factoring companies may have monthly minimums, volume limits, credit restrictions, or long-term contracts that may not suit the needs of some truckers.

• • You may have to sign a long-term contract or meet a minimum volume requirement with the factoring company.

• • Customer relations: Factoring invoices may affect the relationship between the trucker and the customer, as the factoring company takes over the billing and collection process. Some customers may not like dealing with a third party Factoring Company, or they may perceive the trucker as less professional or trustworthy.

• • Beware!!! Many Factoring Companies are extremely sly in their method of keeping you on as a customer especially if you want to move on to a different Factoring service.

• • READ THE FINE PRINT of the contract or even better have your attorney read over the contract to keep you from making a huge mistake and locking yourself into an under performing Factoring Company!

• • The #1 issue that comes to mind is the method in which you can break the contract, it usually isn’t as simple as saying ‘GOOD-BYE”! There are several well known Factoring Companies that have severe penalties for breaking the contract.

 

Any costs that cut into your profit need to be individually assessed to determine their value to your company. Just because Factoring makes life just a bit easier, doesn’t make it the best route to go. If you can manage to work on “Cash Flow”, DO IT… 

TRIUMPH Business Capital

If you decide to go “All In” and Factor your Invoices, I am going to recommend one Factoring Company to you: TRIUMPH Business Capital. Having worked in the Logistics end of the business for several years, I have come to know the service companies that support our businesses either first hand or by reputation.

When it comes to Factoring it is hard to beat TRIUMPH. QDS is affiliated with Triumph which means that if you should decide to use them we will get a small commission if you sign up (It costs you nothing at all)!

When I book a load and do the Credit Check the result comes up as quickly as I can enter the broker’s MC Authority and <CLICK> the mouse button!

I have been dispatching a certain Owner Operator for 7 years now and he has been usingTRIUMPH the whole time, they have been a pleasure to work with from the beginning.

Give them a try, and if you decide to go with them, hammer out the financials then they will pay me a couple of bucks, not enough to retire on but maybe I will be able to afford to buy toilet paper at Walmart!

QDS Summary:

Quality Dispatching Services has been in the freight business for over nine years, we have the experience to know what works and the pitfalls for Owner Operators.

We will keep you rolling with “Good Paying” Freight. Don’t settle for a cheap dispatcher who charges $50 per week and handles too many trucks. Remember the saying; If it sounds too good to be true…” You deserve better, don’t take a chance with subpar service and support!

We charge 5% of the load value for Class 8 rigs and 8% for Hot Shot rigs and Power Only. We respect owner operators and the challenges you face every day, and we don’t want to be one of them. If you would like to discuss having our company Dispatch your truck(s) call us at:(337) 393-0012

Remember:

Safety is paramount in our industry. Always prioritize safe practices and drive responsibly.

Think Safety – Drive Safely!