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Factoring services for trucking companies

Running a business – especially a small or start-up one – is not easy, and maintaining a reliable and steady cash flow can make all the difference: success or failure. Outstanding bills can be a serious complication, especially if you depend on incoming funds for payroll or rent. That’s why the Truck Dispatcher Service has teamed up with RTS Financial to offer our clients factoring services that can make a big difference in doing business.

Why you should you consider truck factoring service?

Truck factoring – also known as truck factoring – allows carriers and owner-operators to convert unpaid bills into cash. Essentially, an independent trucking factoring company actually buys unpaid accounts receivable at an upfront rate of typically 80% to 90% of the value, and then collects the unpaid invoices itself. Factoring in the trucking industry means that someone else assumes the risk of nonpayment. For many trucking companies, even a discount on invoices fully justifies receiving factoring services, as they immediately have funds with which to pay their expenses or even take on additional work to make more money.

Benefits of factoring for trucking companies

We’ve mentioned a few of the benefits of factoring for trucking companies, but let me elaborate on them. It’s no surprise that a driver doesn’t want to part with some of their profits, and this is a necessary aspect of working with a trucking factoring service. However, a small amount of lost profit can actually lead to serious benefits for businesses and drivers, and in the long run, even lead to an increase in your profits.

Fast capital upfront

Often, it can take some time between accepting a job and paying for it. While this is not always problematic – for example, if the business is established and company revenues are high – it can create serious problems for drivers in less favorable times. In addition, it’s unfair because the truck driver has completed his part of the transaction and still hasn’t been paid.
With factoring, there are no such problems. The money is paid in advance by a third-party factoring company, and the truck driver receives his funds promptly and without delay.

A more reliable source of income

For truck drivers, forecasting and planning for the future can be a difficult task. After all, even when orders are already coming in, there’s a chance that many payments on those orders will be delayed, which means the driver can’t predict exactly when he’ll get the money he’s owed. This is a big problem, especially when it comes to securing loans or investments for business development projects. Simply put, the lack of reliability prevents truck drivers and owner-operators from growing their businesses the way they would like.

Truck factoring service gets rid of this uncertainty. By taking orders and working under factoring, drivers guarantee themselves a steady stream of income. They can then use that steady revenue stream to justify their annual income, making it easier to find investors, get loans, and expand the scope and capabilities of the business.

Income Flexibility

Some drivers may not like the idea of accepting a factoring order. After all, by accepting such an order, he or she only gets 80% or 90% of the total cost of the order, which may seem unfair since the driver is the one doing the actual work. But the idea of factoring services to the trucking company or driver is that they agree to this reduced rate to ensure they get paid more reliably.

This gives you flexibility as a truck driver or owner-operator. You can accept factoring orders that will provide you with a base income – a regular stream of income that you can count on. You can then increase that income by taking other full-pay orders. As your situation changes and you start to avoid risk more or less, you can change the ratio one way or the other-the choice is yours as that flexibility increases.

Reducing risk

An unreliable payment schedule is one thing, but the risk of not making any money at all is an even bigger problem for truck drivers. Conflicts with customers, dishonest customers, and a host of other factors can lead to non-payment. For small trucking companies or truck owner drivers, this can lead to disaster. So many businesses have run into serious problems because they have not been able to get the payments they are entitled to.

Certainly, this is a great benefit for truck drivers. With truck factoring, the risk of non-payment is taken care of by someone else. You don’t have to worry about getting the money owed to you and can focus on the other – more positive – aspects of doing business.

How does the Trucking Factoring Work?

The general process you encounter with trucking factoring is as follows:

You provide the customer with an invoice for the work performed.
You transfer the unpaid invoices to the factoring service. If you use contract factoring (high volume), you turn over all of your unpaid invoices to the factoring company. If you use spot freight factoring (low volume), you choose which invoices you will submit to the factoring service.
The factoring company pays you an agreed-upon advance. Once everything is ready, it will be no more than within 24 hours.
Your customer pays the truck factoring service – the factoring company is now responsible for finding customers to pay.
Once the invoice is paid, the factoring company will take its fee and then send you the balance.

Other Considerations for Truck Factoring Services

Your truck factoring agreement can be either recourse or non-recourse. If you have a recourse agreement and your customers are NOT paying their invoices, you will be forced to buy them back. The factoring company may even ask for additional fees. If you have a non-recourse agreement, once the factoring company receives the unpaid invoices, they become the property of the factoring company. If customers don’t pay, it’s no longer your problem. As a result, the rates charged by factoring companies tend to be higher for non-recourse agreements.

Factoring for Trucking: Pros and Cons

Like any important business decision, the decision to use truck factoring depends on your business model, the scale of your business and how much risk you can afford.

Some of the pros of truck factoring include:

Limited qualifications – This type of factoring depends on the creditworthiness of your customers, so you won’t have a large number of qualifications.
Almost Instant Financing – Instead of waiting a long time for an invoice to become due before you receive the money you’re owed, you can get most of the amount upfront through the factoring company.
The more active your business grows, the more financing you can get – This is because the value of the invoices you issue determines the amount of your advance. That is, as your business grows, your advances will increase

Some cons of hiring a trucking factoring company include:

It can get expensive – In exchange for receiving your advances through the factoring company, you don’t receive a certain portion of the total amount (i.e., the factoring company’s commission).
It can get even more expensive if your customer doesn’t pay the invoice – If you have a recourse factoring agreement, you will be required to buy back the invoice if the customer doesn’t pay, and you will likely have to pay the factoring company’s commission.

Why Should You Choose the Truck Dispatcher Service`s Factoring Services for Your Trucking Company?

There are many factors that make drivers choose the Truck Dispatcher Service and the factoring services we offer. We’ve prepared a few of the most important factors that will allow you to make your choice and learn more about what makes us the best in the business.

We focus on protecting our clients’ profits

At the Truck Dispatcher Service, we care about our clients and their bottom line. We try to help our clients get the most out of our truck factoring services and take advantage of the benefits that these services provide. You can count on us to put you first.

We have a long track record of success

We already have many clients who have turned to us for truck factoring services. These clients are making the most of the opportunities that truck factoring offers, and in the process are strengthening their business, increasing their flexibility, and planning for the future. We encourage you to join this growing family.

We understand the trucking industry and all that goes with it.

You need to know that you are partnering with a team that understands your field, your industry and what you do. We at the Truck Dispatcher Service are proud to consider ourselves such a team. We know this industry inside out, and we’re also experts in factoring and helping our customers benefit. You can trust us, we’ll always stand by your side.

We cooperate with the best

We are proud to partner with RTS Financial. RTS gives us the means to offer our clients highly efficient trucking factoring services and provide them with all sorts of benefits. Together with our partners at RTS Financial, we are the factoring company truck drivers can count on – we try to help you and your business achieve more while you’re on the road.

We provide expert support to all of our clients

The best services come with the best support. We take this seriously at Truck Dispatcher Service and are ever happy to offer guidance and assistance, as well as answer any questions you may have about our services. You can contact us at any time, and we will immediately help you.

Learn more about our truck factoring services or get started Today

For many trucking companies, engaging factoring services helps them stay in business and maintain a steady cash flow so their business can grow. Because the Truck Dispatch Service helps owner-operators make and keep more money, we have partnered with RTS Financial, who can provide the factoring services you need to be successful.