When you are just starting out in the trucking business, it can be difficult to determine which connections are worthwhile for success.
Many industry professionals claim they can help you see payments quickly, but are there drawbacks? In this article, we’ll discuss two main types of trucker funding — factoring and quick pay, and which route is better for you.
Trucker Funding Definition
Trucker funding describes the financial opportunities available to those managing deliveries and fleets. Most often, trucker funding focuses on improving a company’s cash flow so decision-makers can pay employees, maintain vehicles, buy trucks for a fleet and cover fuel costs.
Trucker funding can be the ticket to growing your business faster compared to traditional methods of completing deliveries and waiting for checks to arrive weeks or months later. However, factoring and quick pay for truckers have distinct differences.
About Truck Factoring Services
Factoring services or freight factoring services involve pulling in an outside party to receive payments for deliveries as soon as an invoice is accepted. Rather than completing a job and waiting for payment to process, a factoring company purchases an invoice from you, normally at a discounted rate, and they are left to take care of the rest. Your company sees money instantly upon finishing a job.
Truck Factoring Process
Factoring for truckers follows a simple process:
- Job completion: Your trucking company takes care of a delivery and requests an invoice.
- Contact a factoring expert: You contact a reputable factoring company to sell your invoice at a slightly lower price than the full amount.
- Receive payment: Once the invoice sale is done, your trucking business is paid by your factoring partner. The factoring company you work with pays you for most of the invoice amount.
- Final payout: The party responsible for factoring services waits for your client to pay the cost of the invoice in full. Your factoring services partner takes a cut of the transaction and you receive the remaining amount of money agreed on.
About Quick Pay Services
Quick pay services involve working with a broker or shipper to earn payments. The main difference between factoring services and quick pay offerings is factoring payouts are done immediately when your client is approved. Quick pay arrangements can take anywhere from two to 30 days because you do not sell your invoice.
Factoring services for truckers are easier to secure compared to quick pay options due to the abundance of companies providing these offerings. Both factoring and quick pay businesses offer unique terms, rates and fees — do your research to find a trustworthy partner who cares about your financial well-being as a startup freight business.
Reasons Factoring for Truckers Is the Superior Option
There are numerous benefits to choosing a dependable factoring partner for your trucking business. Of course, you receive payouts faster than with quick pay plans, but these are additional perks you can expect with factoring services:
- Scale your business: With steady cash flow, freight factoring services are an excellent way to grow your team, fleet, equipment and clientele.
- Reduce financial risks: Continue operating while a factoring company handles any late invoice payments from your customers.
- Eliminate financial gaps: Pay employees and stay afloat knowing you can cover business expenses right after completing a job.
- Minimize paperwork: Factoring services leave you free to run your business while your partners follow up with invoices and reports.
- Enjoy factoring company perks: Credible factoring businesses provide fuel cards, financial reports and back-office support.
FactorLoads Is the Obvious Choice for Factoring Services
With FactorLoads, you don’t need to wait for a shipper or broker to make payments. We separate ourselves from other factoring businesses by eliminating contracts from our process. Our professionals are known for getting carriers paid on the same day as the delivery, and we give you the best fuel discounts in the industry as a cost-free perk of choosing us for service.
FactorLoads is available 24/7/365 for your factoring needs. Accept carrier loads knowing we’ll never charge hidden fees thanks to our true flat rate. Our team specializes in helping owner-operators and small trucking companies, so we’ve got you covered.
Get in Touch With Us for Freight Factoring Services
Ready to learn more about our truck factoring services? Get a quote for our services or speak with a representative for further details.