If you own a trucking company or are managing one, then you know how fast expenses can accumulate when you’re hauling loads up and down the country. What’s worse, late client payments can make it very hard for you to cover fuel costs, pay drivers’ salaries, or service your trucks.
Unpaid invoices can be very chaotic, that’s why many trucking companies turn to factoring as a reliable solution to maintain a positive cash flow. Truck factoring companies provide financing to trucking companies by buying their accounts receivables at a discount. The factor then collects the payment detailed in the invoice from the trucking company’s clients.
The key point to take note of here is that factoring is not the same as lending money. By factoring, you as the trucking company, receive a cash advance for money you’ve already earned.
What’s even better is you don’t have to wait 30, 60, or 90 days to get your payment. You will receive the money from the factoring company within 24 hours of submitting the invoice(s). But choosing which factoring company you should work with is no easy decision.
To make the process a lot less overwhelming, here is a list we’ve created of the best truck factoring companies that are in business today.
1. Factor Finders, LLC
Factor Finders offers comprehensive recourse and non-recourse invoice factoring services suited for small businesses (B2B and B2G) in need of more working capital.
With recourse factoring, the trucking company is obliged to buy back the invoice factored should their client fail to pay their invoice. With non-recourse factoring, Factor Finders alleviates trucking companies from the possibility of incurring bad debt by assuming full responsibility for any unpaid invoices.
One function provided by Factors Finders that makes it such an attractive option is its notification and non-notification factoring service. Some trucking companies are not entirely comfortable with their customers knowing they’re using a factoring company and this factoring company understands that fully well.
As such, the account managers at Factor Finders are highly proficient in working around these situations with such professionalism that will leave both parties comfortable with the arrangement.
When and how much a trucking company factors is entirely up to the carrier. However, you can expect an upfront cash advance worth between 80% to 95% of the invoice amount. For instance, if a carrier submits an invoice worth $2,500, they can expect an advance of $2,000 to $2,375.
For more information, check out factorfinders.com today to get a free and more detailed quote.
2. ACS Factors
ACS Factors helps companies in the U.S. that are struggling with cash flow by providing them with a funding alternative to banking.
Even though the company was founded in 2014, its management team has over 4 decades of experience in factoring. John Cummings, the company’s current President has been in the factoring business since the 1980s.
ACS Factors provides both recourse and non-recourse factoring so trucking companies don’t have to spend valuable resources on following up payments for hauled loads. The factoring company offers month-to-month factoring agreements and makes payments through ACH or wire transfer in 24 hours or less.
Trucking companies are allowed 24/7 access to their accounts as well as free credit checks on potential clients with immediate approvals if the new clients meet the right qualifications.
It’s worth pointing out that ACS Factors has no term contracts, minimums, or termination fees.
3. CoreFund Capital
CoreFund Capital offers invoice factoring services not only to the trucking industry but the oil and gas industry as well, including staffing agencies in need of factoring services.
CoreFund Capital pays on the same day that loads are delivered and offers full cash advance options that pay the full value amount of the invoice factored. The company operates 6 days a week with extended funding times to better serve drivers who are hauling loads on the weekend.
Trucking companies that factor with CoreFund Capital can access its dispatch service that sets up loads to keep drivers on the move so they can earn more money. The company also provides 24/7 online account access as well as a discount fuel card to help trucking companies save money at the gas pump.
4.Orange Commercial Credit
Orange Commercial Credit offers trucking companies quick access to funds they need to maintain business operations. Having been in the business since 1979, this company has committed account executives who work to provide excellent service to its customers.
This factoring company offers same-day cash advances to trucking companies between 85% and 97% of the value amount of factored invoices. There are also no hidden charges or sign-up fees.
Trucking companies get to choose which invoices they can factor since the factor has not set any minimum amounts. Carriers can also access their online accounts at any time of the day. This makes it easy for drivers to view their online reports and submit new invoices as well.
One drawback to this company is that it does not offer non-recourse factoring. However, it works with the carrier’s clients to facilitate timely payments so that the carrier does not have to pay back the cash advance received from factored invoices.
5. RTS Financial
RTS Financial was established in 1995 and offers cash flow solutions to businesses across various industries. It has, however, specialized in helping trucking companies solve working capital issues by providing fuel card programs and even equipment leasing.
RTS Financial has a mobile app called Protransport that allows carriers to access same-day funding services, new client credit reports, as well as a fleet management software that provides trucking companies with valuable information regarding their work processes.
Although this factor has no hidden costs such as invoice-upload charges, minimum-volume fees, or ACH fees, it does not reveal its pricing or rates until a carrier makes an application. To apply, you need to visit their website and fill in the contact form. From there. an agent will reach out on phone and take you through your application and discuss your options.
Factors To Consider When Choosing an Ideal Factoring Company for Your Trucking Business
Service Charges and Interest Rates
One of the first things to consider when choosing a factoring company is its service charges and rates. The costs of working with a factoring company can have a huge impact on a trucking company’s revenue.
If the factor has high rates that are unfavorable for business, these charges can significantly eat into the money the trucking company ends up getting in total.
You also need to consider the working terms of the company in regards to recourse factoring and non-recourse factoring. These two approaches will determine if you will pay the money back if the factor is unable to collect or if they’re going to assume that risk. However, keep in mind that non-recourse factoring will cost you a bit more.
Time Taken to Process the Funding
You also need to consider the time a factoring company takes to relay funds.
The possibility of immediate funding is one of the major reasons trucking companies opt to use factoring companies. As such, you need to consider the turnaround time from when you submitted the invoice to when you received the money you can quickly use as working capital.
It often takes around 3 working days for a factoring company to set up a profile account for a trucking company. A bigger account may take more time. However, any subsequent payments made after an account has already been set up should take no more than 24 to 48 hours.
Are the Factoring Services Industry-Specific?
While finding a factoring company with excellent turnaround time is great, you need to make sure their services are ideal for the trucking industry. Although the invoice factoring process is standard across nearly all industries, truck factoring requires the factor to have some expertise and expertise in the business.
You’ll find that an industry-specific factor can offer additional services to help you streamline your business operations. For instance, Factor Finders offers notification and non-notification factoring because they understand the clients of trucking companies may not be comfortable with the carrier factoring their invoices.
The Bottom Line
Dealing with late payments is part of running a company in the trucking industry.
As the owner or manager of a trucking company, playing a constant waiting game with client payments can be a cause of huge inconvenience. Your ability to manage your cash flow will either make or break your business whether you own a conglomerate of 50 trucks or you’re just starting out in the business.
For this reason, you need to take time and determine whether invoice factoring is ideal for your business needs. If so, consider the factoring companies listed above and outweigh the pros and cons of working with each factor.
With options such as Factor Finders and Orange Commercial Credit, you can access instant cash advances without worrying about a factoring company compromising your client relationships.