The Lazy Trucking Company’s Guide to Freight Bill Factoring

    Company
    Rate
    Reserve
    Payment Options
    Fuel Card
    Fuel Advances
    Credit Checks
    Freight factoring for trucking companies by Thunder FundingContact Us

    (877) 780-6530
    2% - 4% Non-Recourse FactoringNo ReserveWire: $20
    ACH: $10
    Express Code: $10

    $10 - $20 per advance, will advance up to 50%

    Free online credit checks
    Freight factoring for trucking companies from Oakhill CapitalContact Us

    (877) 784-3019
    3.5% Non-Recourse FactoringNo ReserveACH Transfer: Free
    Free access to extensive list of approved brokers
    Freight Factoring for trucking companies from Factor FindersContact Us

    (888) 724-5062
    1% - 5% Recourse and Non-Recourse FactoringNo ReserveWire: $20
    ACH: $10

    $10 - $20 per advance

    Free online credit checks
    ecapital100-grey
    Contact Us

    (866) 932-0487
    1-5% Recourse and Non-RecourseNegotiableWire $15
    ACH $9

    $20 per advance

    Free online credit checks

    Too lazy to research freight factoring for your trucking business? We’ve compiled the essentials into this 5-minute guide.

    It’s no secret that your ability to control your cashflow will make or break your trucking business — whether you’re a solo independent owner/operator or you’re the proud owner of a 50 truck fleet.  If buying float time with the creative use of credit cards or going to your banker, hat in hand, to request a business line of credit has all the appeal of a root canal, there is another option available for small trucking fleets and owner-operator businesses: freight bill factoring.

    For those of you unfamiliar with the practice, transportation factoring is nothing more than assigning your unpaid freight bills to a third party company for less than you would receive if you were to bill your customer and wait for payment.  This enables you to get paid more quickly upon completion of a run, giving you faster access to the cash you need for funding your day-to-day operations.

    Here’s how trucking factoring works, step-by-step:

    1) Once you book your load, you fax or email details about your customer, the load, and your rate confirmation to the factoring service.

    2) The factoring service lets you know if your customer is approved for load factoring

    3) You pull the load

    4) When you’re empty, you fax or mail your Bills of Lading and load-related documents to the factoring company.

    5) Later that day (or within 24 hours) the factoring company will initiate a direct deposit to your bank account or to your Comdata account for the amount of approved charges (which could be 60%-90% of your billing).

    6) Once your customer has paid the invoice, you would receive the balance

    Transportation invoice factoring isn’t for everyone, but it could provide you with the cash you need to keep your wheels turning and provide some stability to your trucking business while you wait for your customer to pay their freight bill.

    'Net 15?' You wish.

    The best option for you is to invoice your customer directly and wait for payment to come in,  but many customers are very slow to pay their invoices.  If you need the cash right away, working with freight factoring companies might provide the financial cushion that you need to keep your trucks on the road.

    Only you can determine if truck factoring makes sense — and this information should arm you with the knowledge you need to make a wise decision and keep from being victimized by a dishonest transport factoring company that might not have your best interests in mind.

    —————————-

    First, it should be noted that truck factoring is not free.  There is a cost involved.  It’s up to you as a business owner to make a determination as to whether or not it’s worth the cost — which can vary from as little as 1.5% to as much as about 5% of the linehaul revenue.

    No such thing as free money

    It’s also important to note that you will likely face paying a number of fees, charges, and other expenses if you utilize the services of a freight bill factoring service.  In most cases, your net proceeds from assigning your bills of lading to a factoring company will more than likely result in your receiving an advance of 60%-90% of the anticipated revenue (depending upon the factoring service you utilize).  The balance would be remitted to you once your customer pays their bill.

    Second, all freight factoring services are not created equally.

    Here are some key questions to ask when considering trucking factoring companies:

    Do you provide recourse- or non-recourse-based freight factoring services?

    The name may seem unfamiliar, but the ramifications to your profitability could be substantial: Recourse-based freight factoring means that if your customer fails to pay the factoring service, that you will allow them to come back to you for reimbursement; whereas, non-recourse-based freight factoring means that even if the bill doesn’t get paid, you have your money.

    Do you require me to let you bill my customer for all future loads I pull for them or can this be done on a load-by-load basis?

    While you may have a temporary cash shortfall that you’re trying to cover by utilizing the services of a freight factoring service, many will require that they handle all future freight bill collections for monies owed to you by that customer.  Depending upon the customer, you may not want to go this route, but keep in mind that some factoring companies are very firm about this requirement.

    Some freight bill factoring services give you the option of deciding on a load-by-load basis whether to handle the billing and collections yourself or whether to let them handle it on your behalf.  In addition, factoring services that will let you make the decision yourself will also let you decide whether you want immediate payment or payment when the invoice is actually paid.  This can be convenient for you, because it will almost permit you to utilize the freight factoring service as a de facto billing service

    Is there a price difference if I let you bill my customer for all loads that I pull for them?

    Some freight factoring companies may permit you to decide on an invoice-by-invoice basis whether you want to bill your customer yourself or have them do it, while others require all billings to originate through them.

    If you utilize their services on a “spot-usage” basis and don’t elect to have a particular invoice factored, you will still likely be faced with paying $15-$20 for billing.  You would then receive payment once your customer pays the invoice.

    Do you charge extra fees for additional services?

    Requirements for Customers — Most freight factoring companies won’t automatically pay invoices from your customers.  They will want to have a reasonable assurance that your customer isn’t a deadbeat, so they will likely require a credit check to ensure that there is a likelihood that they will be paid.  Most transportation factoring companies will do a credit check on your customer for you (which could involve a nominal fee).  Other factoring services will give you access to a list of customers that are “pre-approved” — companies that meet their credit requirements.  This can also come in handy for you, especially if you want to know a prospective customer’s credit prior to booking the load.

    Do you require deposits? And do you advance 100% of the freight bill?

    Some factoring services will require deposits, while others will not.  Before signing on the dotted line, be sure to ask so that you have a clear understanding of exactly what you are getting into.

    It is rare for a factoring service to advance 100% of your freight bill, so find out what their policy will be — and if it will be the same for all customers and freight bills or if it could change from load to load.

    A Few Popular Choices for Freight Factoring:

    Company
    Rate
    Reserve
    Payment Options
    Fuel Card
    Fuel Advances
    Credit Checks
    Freight factoring for trucking companies by Thunder FundingContact Us

    (877) 780-6530
    2% - 4% Non-Recourse FactoringNo ReserveWire: $20
    ACH: $10
    Express Code: $10

    $10 - $20 per advance, will advance up to 50%

    Free online credit checks
    Freight factoring for trucking companies from Oakhill CapitalContact Us

    (877) 784-3019
    3.5% Non-Recourse FactoringNo ReserveACH Transfer: Free
    Free access to extensive list of approved brokers
    Freight Factoring for trucking companies from Factor FindersContact Us

    (888) 724-5062
    1% - 5% Recourse and Non-Recourse FactoringNo ReserveWire: $20
    ACH: $10

    $10 - $20 per advance

    Free online credit checks
    ecapital100-grey
    Contact Us

    (866) 932-0487
    1-5% Recourse and Non-RecourseNegotiableWire $15
    ACH $9

    $20 per advance

    Free online credit checks

    andre May 16, 2013 at 8:45 am

    hey I have a question, can I have 2 business accounts and 2 different factoring company that are handling my bills
    one for one account and other one for other?
    I believe I will need to have also 2 fuel card link to different accounts?

    Samuel Barradas May 16, 2013 at 9:26 am

    No, there are a couple reasons why it would be very unusual to be able to work with two different factoring companies at the same time.

    1) Most factoring contracts are like a short-term loan. You give your invoice to the factoring company, they loan you ~95% of the value of the invoice, and the loan is repaid when they collect the invoice from your customer. If for some reason the factoring company can not get your customer to pay their invoice, you are responsible for paying back the loan. If you refuse or are unable to pay back the loan, the factoring company has the ability to take drastic measures against your business, such as seizing assets. If you are working with two factoring companies at the same time and this situation occurs, they not only have to fight you to get paid, they also have to fight each other. It’s messy, expensive, and time consuming, so a factoring companies will avoid working with businesses that are already getting factoring services elsewhere.

    2) It’s possible that you could submit the same invoice to two different freight factoring companies at the same time. This would lead to the same problem we just discussed in 1).

    safeyankee December 16, 2013 at 9:33 pm

    I’m curious as to limitations of these factoring companies
    Will they do employee(s) payroll, or are there seperate companies for that?

    Will factoring companies do taxes for you, i know of one that will assist in getting authority for you even though its a simple process, my question is what else besides getting you your money the same day and and charging you for it, will they do?

    Samuel Barradas January 7, 2014 at 5:43 pm

    Sure, some factoring companies provide additional services that aren’t directly related to financing, but each company is different and you’ll need to contact them directly to get a straight answer. Personally, I think you’re better off giving the work to several companies who specialize in each of those categories, rather than handing it all off to one company that might not be particularly focused on taxes or payroll.

    Michelle January 7, 2014 at 5:33 pm

    DO NOT DO BUSINESS WITH TRANSAM. THEY ARE FULL OF CRAP AND WILL TAKE YOUR MONEY, LEAVE YOU BROKE, AND WITH NO FUEL MONEY!!

    Samuel Barradas January 7, 2014 at 7:20 pm

    Hi Michelle, do you mind going into more detail about your experience with TransAm? I feel that we have a responsibility to host reviews of factoring companies, but it’s better if there is more information available so that readers can understand what happened.

    Harry Gauer January 8, 2014 at 9:24 am

    Hi Samuel; I am new to this factoring business and would like to find some good info on different companies to factor our freight bills of lading, it is kind of scary to read all the people that is getting taken by bad factors do you have any good insight of who we could contact. Thank you Harry

    Samuel Barradas January 8, 2014 at 10:02 am

    I’d say your best bet is to call up a few companies, make a note of the ones that you like, then google them to see what complaints pop-up. I wish I had some extra insight to help you, but I don’t know any more about specific companies than what readers have reported in the comments sections, and that’s not much.

    Luis February 5, 2014 at 3:16 pm

    Hey Samuel, I have family in the trucking business. What legal actions would I have to take if I wanted to start my own factoring business within them? Thanks!

    Samuel Barradas February 5, 2014 at 4:29 pm

    Hi Luis, I come at this from the trucking perspective, so I don’t have much useful information about starting a factoring business. You might check out this blog, they seem knowledgeable: http://factoringinvestor.com/

    Comments on this entry are closed.