We are giving you a list of the top factoring company for truckers or owner operators in North America. So that next time you think of factoring in your invoices then you could make an informed choice.
Every trucking company needs to know that cash is king. There are many expenses, overheads, and payments that a driver needs to pay, day in and day out.
As a driver is getting loads from a broker, you should know that the broker only will pay you only after a 30 or 45 or 90-day cycle. This means you need to find cash for working capital, here is where factoring comes into play.
We are listing the 10 top factoring companies for trucking businesses that new drivers can work with to solve the cash flow issue.
So that next time you think of factoring in your invoices, you could make an informed choice. Please go through the top factoring companies for trucking in the United States to make an informed choice.
Best factoring for box truck owner operators: MaxTruckers box truck factoring
Best factoring for semi truck owner operators: MaxTruckers semi truck factoring
Best factoring for flatbed owner operators: MaxTruckers flatbed factoring
Best factoring for reefer owner operators: MaxTruckers reefer factoring
Best factoring for hotshot owner operators:MaxTruckers hotshot factoring
Factoring New Owner Operators
4.7/5 Rating in TrustPilot, Multiple proposals
- Factoring rate 1% to 3.5%
- Contract Period – Month on Month (No lock-in for months or years)
- Minimum invoice value- Non
- Minimum load requirement- Non
- Same day payment- Yes
- Termination charges- No termination charges
- Customer Support – Dedicated Account Manager – (MaxTruckers Buddy)
- Value Adds – Free Fuel Card, Fuel Line of Credit, No Minimum Invoice Value, etc.
- MaxTruckers Factoring New Owner Operators
- Top Factoring Companies for Trucking and Owner Operators:
- Comparison of the Best Truck Factoring Companies
- Detailed Review of Trucking Factoring Companies
- 1. MaxTruckers Factoring Consultation
- 2. Nfusion Capital
- 3. ACS Factors
- 4. QP Capital
- 5. Apex Factoring
- 6. TBS Factoring
- 7. eCapital
- 8. St.John Capital
- 9. Compass Funding Solutions
- 10. Triumph Business Capital
- Factoring Guide for New Owner Operators:
- The Process of Invoicing in Truck Factoring:
- What type of Factoring program should you choose – Recourse Factoring or Non-Recourse trucking factoring
- (a) Recourse Truck Factoring :
- (b) Non Recourse Truck Factoring :
- How much do trucking factoring companies charge?
- Should You Choose a Factoring Company for Trucking?
- Know about the Various Factoring Traps Used by Few Truck Factoring Companies:
- How To Choose A Factoring Company For Trucking?
- Is a factoring company for trucking worth the hassle?
Top Factoring Companies for Trucking and Owner Operators:
Factoring rate 1% /2.75%
Factoring rate 1%/2.75%
Factoring rate 1%/3%
Factoring rate 1%/3%/3.5%
Factoring rate 2%
Factoring Rate 1%
Factoring rate 3.2%
Factoring Rate 1.5%
Compass Funding Solutions
Factoring rate 2.25%
Triumph Business Capital
Factoring rate 1% to 3.39%
Comparison of the Best Truck Factoring Companies
MaxTruckers FactoringRecourse & Non Recourse
ACS Factors Non Recourse
Apex Non recourse and recourse factoring
TBS factoring Non recourse and recourse factoring
eCapital Non recourse and recourse factoring
St.John Capital Non recourse and recourse factoring
Compass funding solutionsNon recourse and recourse factoring
Triumph Business CapitalNon recourse and recourse factoring
Detailed Review of Trucking Factoring Companies
1. MaxTruckers Factoring Consultation
4.7/5 Rating in TrustPilot, Multiple proposals
Max Truckers is a consulting company providing consulting services for Factoring, Dispatch, Fuel Card, Insurance, and Busines Development. All consultations except business development are free of charge to drivers, truckers or business owners.
MaxTruckers has tie-ups with factoring companies. Such tie-ups provide great value for trucking businesses, fleet owners and truckers. This makes MaxTruckers the best factoring company for new owner operators.
You get a minimum of 6 proposals from the top 3 factoring companies based on your business nature. The employees or MaxTrucker buddies are very knowledgeable, helpful, and solution-oriented. Each client is allotted a care associate or (MaxTrucker buddy), you can raise your queries, and apprehension, and get it expertly answered in no time. This is why MaxTruckers provides the most satisfactory factoring consultation for owner operators or truckers.
Features of Maxtruckers Factoring:
- MaxTruckers gives an impartial, fair, and free factoring consultation for drivers, truckers, and owner operators.
- They provide factoring proposals designed as per your business nature
- You get multiple factoring proposals
- You get pre-verified handpicked & trustworthy factoring companies only
- Every customer gets a dedicated MaxTruckers buddy for factoring consultation
- They do a regular quality check of the factor with you to ensure that you are receiving the best service (after onboarding)
Max Truckers Special Bonus:
You get a complimentary MaxTruckers startup kit worth $500 on sign up:
Free fuel card with an average saving of 37 cents per gallon.
You get 30 days of free DAT load board, the largest marketplace for freight loads and trucks with over 600,000 loads per day.
You also get a free list of 300 brokers, verified brokers who work with new drivers or fleet owners.
Refer a friend for factoring and get $150 per referral, MaxTrucker referral program also lets you earn $1000+ extra earnings or commission per month.
Also, get access to MaxTruckers’ free knowledge resources that can help you to grow your business fast.
MaxTruckers is an organization that helps fleet owners or drivers, and business owners to operate trucking businesses seamlessly. If you signup with MaxTruckers you get 6 customized proposals from 3 factoring companies. MaxTruckers is a top choice for factoring for owner operators
These enlisted factoring companies are pre-verified, 100% trustworthy & 100% excellent feedback.
Our reviewers found out that MaxTruckers is the company to get services from for small drivers and business owners. Because MaxTruckers is a small business that understands the challenges of your trucking operation. This is why MaxTruckers factoring for owner operators unlocks the best benefits for your trucking company.
2. Nfusion Capital
Ideal for recourse factoring
Nfusion Capital, Austin, TX is a factoring company specializing in financing businesses that are under-capitalized and under-served by the banking system.
On reviewing the service we found that Nfusion’s factoring is available for owner-operators. large fleet owners and freight brokers. Nfusion offers factoring advances up to 97%. Nfusion is a top factoring company for owner operators.
Nfusion has an easy sign-up and same-day approval. They offer both recourse or flat rate factoring and non-recourse factoring. They provide online account management and easy upload of your freight docs.
- You are not required to factor all your invoices
- Nfusion provides online invoice submissions and reporting system
- They provide super fast payment
- They also provide fuel card
- Nfusion provides a 100% non-recourse plan
- They provide month on month contract
- They provide robust customer service
- Nfusion has no hidden fees
Upon reviewing thoroughly, we found that Nfusion factoring for trucking companies has these benefits:
- Discount rates from 1.5 to 3.0% per 30 days
- Not required to factor all your invoices
- Online invoice submissions and reporting system
The factoring plans are very congenial to drivers or owner operators. because its factoring program has no contract period, no factoring limit, and zero termination fee.
Rather than putting your trucking operation in a pre-built service bracket. Nfusion tries to understand your specific cash flow challenges and deliver you a custom-fit solution. This is why Nfusion provides one of the best factoring for new owner operators
3. ACS Factors
Month on Month contract, ideal for nonrecourse
ACS Factors gives working capital to small businesses in the form of non-recourse factoring. ACS Factors helps truck drivers or owner operators to turn accounts receivables into cash on the same day. It’s a small and medium business with 40 years of combined factoring experience, that understands the owner-operators.
ACS is the best factoring company for the trucking business. They provide the best non-recourse factoring for new truckers, owner operators, and drivers.
ACS provides prompt services, easy invoice factoring; free online credit checking, immediate credit approvals; quality customer service, receivable management services, and flexible capital access.
ACS factors are one of the best factoring companies for owner operators.
- ACS provides prompt, professional service every time you call.
- ACS gives 3 percent factoring rate
- ACS provides easy processing of invoices to cash
- ACS provides free online credit checking
- ACS provides immediate credit approvals
- ACS provides courteous customer service and a quality receivable management service
ACS factoring for owner operators or trucking companies gives small businesses working capital solutions in the form of non-recourse factoring.
We recommend ACS factoring because of the benefits it renders to a small business which include:
• Instant access to cash by factoring their accounts receivable
• Achieve a robust business pace
• Credit checking on new and existing customers
• Credit guarantees on factored invoices
• Professional, experienced, and courteous staff
• No long term commitments
• Simple, no-fee application
ACS Factor’s plans are goods for small owner operators, drivers and small trucking businesses, because they don’t have any contract period lockin, no factoring limit, and zero termination fee. This makes ACS factors the best factoring company for new owner operators.
4. QP Capital
Fuel line of credit $2500 per week
QP is the nation’s top truck factoring company for owner operators, drivers, and fleets.
QP Capital does no-nonsense and gimmick-free payroll funding. It also provides the nation’s largest fuel card network with discounts in about 3600 locations.
While looking at the company profile we found that, if you go with QP capital you can choose which invoices you factor in. They provide a non-recourse program that assumes the liability for your nonpaying customer and shippers.
You can factor in your accounts receivables, and receive the payment in minutes after load verification. QP capital is one of the top factoring companies for trucking.
Whether it is insurance, licenses and permits, dispatching, broker relationships, tracking costs, accounting, maintenance, and repairs, or acquiring direct shippers, they have resources to help your transportation company succeed.
QP Capital provides (Recourse, Non-Recourse, and Pure Non-Recourse) factoring. Pure Non-Recourse program means if you deliver the pure load and later pure paperwork, you don’t have to worry, payment will be taken care of. QP’s transparency. variety in-service portfolio and customer care make it the best factoring company for new owner operators.
- With QP you are not required to factor all your invoices
- QP has online invoice submissions and reporting system
- QP has a super-fast payment
- QP has 100% non-recourse also available
- QP has a month on month contract
- QP has a robust customer service
- QP has no hidden fees
QP capital helps hundreds of trucking businesses to get started, grow quickly, and operate profitably without incurring debt.
While in the process of reviewing we found that, owner operators or business owners benefit from QP’s factoring plans, because of no contract period, no factoring limit and zero termination fee, etc. This makes QP the best factoring company for new owner operators. These are the benefits of a contract with QP capital.
- Very simple terms.
- Flat fee structure with no hidden fees.
- No long-term contract and no minimums you must meet.
- Factor what you want.
- When you want to quit factoring with QP, they make your exit or transition as easy and seamless as 123.
We will recommend QP Capital for truck factoring due to ease in doing business, no hidden charges, no predatory practices, uncomplicated contract norms, etc.
5. Apex Factoring
Factoring Fee: 2.75% recourse and nonrecourse 3.5%
Apex Capital has been serving trucking businesses and small freight moving businesses or drivers since 1995. Apex Capital full a service trucking factoring company. Apex buys freight bills, and assists and inspires growth and success in small to medium-sized trucking companies. Review rating for Apex is BirdEye 5/5, BBB A+ accredited
After 2 decades it is still treating its clients as partners and employees with respect. Apex is one of the top factoring companies for trucking.
Apex has developed and fine-tuned technologies and tools that allow small and medium truck drivers to compete in the market.
- Apex provides factoring rates between 2.8% to 3% for recourse service
- Apex provides factoring rates between 3.25% to 3.5% nonrecourse service
- Apex allows you to submit the paperwork using mobile or website
- Apex has no termination fee
- Apex provides a good fuel card
- Minimum monthly invoices 12k to 15k
On reviewing the Apex factoring program we found that they have features like nationwide expectance with benefits like fuel cards, free credit checks, fast cash credits, world-class trucking management, and payment tools.
Apex’s USP is that they manage accounts receivable, give out free and unlimited credit information, provide back-office support and collections, and give a fuel card discount program that saves their clients thousands of dollars on fuel.
Our review found out that the only problem with Apex is that it has a minimum monthly invoice of 12k to 15k per truck.
6. TBS Factoring
Factoring Rates As Low As 1.5%
TBS Factoring service makes trucking easier with its technology and services. TBS helps owner operators, drivers or business owners get established, stay compliant, find loads, and get paid faster.
TBS factoring gives liquidity to owner operators, drivers, and business owners by factoring in trucking invoices. So that you don’t have to wait 30 to 60 days for your bills receivables, You get paid the same day that you deliver the load. Review rating for TBS Trust Pilot 3.6/5, BBB 1/5 accredited
Setting Up with TBS is pretty simple. Simply send them your qualified freight bills with proof of delivery, and they send you money, It’s as easy as that.
TBS also runs credit checks on the customers and shippers who would work with you. This will help you make informed decisions on which load to haul, and which brokers or companies to work with.
- TBS provides same-day cash for invoices
- TBS provides simple freight bill factoring solutions without gimmicks
- TBS provides a variety of cash flow products to suit unique business needs
- TBS delivers friendly personal service
- TBS provides freedom from paperwork and office hassles
- TBS provides rates that are fair and easily understood
- TBS does not ask you to factor all clients
- TBS provides free credit checks for your clients
- Discounted FedEx rate to send overnight paperwork
- No long term contracts and no termination fee
- Need to give 30 days before breaking the relationship
- 10% escrow for nonrecourse transactions
- $5 charge for using a fuel card
- 4.5% factoring rate for (C.H.Robinson, TQL, Coyote & JB Hunt 2% due to Quickpay)
Many customers are really mad about the bad quality of service, many have expressed that in the Trust Pilot reviews. These are disadvantages of their factoring program:
- Family-owned business with low professionalism
- customer service has become bad
- Max 5% rate for nonrecourse program
There are some norms and conditions which reduce the ease of doing business with TBS factoring. Like notice period, fuel card charge, escrow, etc.
3.2% factoring rate, No Minimum invoice value
At eCapital, you get the capital you need, when you need it. eCapital provides the best factoring for trucking companies.
That way you can drive or manage your trucking business. Whether it’s buying new equipment, expanding your team, or funding your next big project. The eCapital makes sure all your funding needs are met. This is why eCapital provide the best factoring for owner operators.
Review and rating of capital Trust Pilot 4.4/5, BBB 4.36/5, Brideye 4.6/5. This makes eCapital a good factoring company for new owner operators.
eCapital helps trucking companies get paid fast. They offer major discounts to boost your bottom line. They have partnered with some of the nation’s top transportation service providers. Truckers can cash in on their pre-negotiated discounts for insurance, fuel, maintenance, and upkeep thus enjoying increased profits.
- eCapital provides same day cash for invoices
- eCapital provides simple freight bill factoring solutions without gimmicks
- eCapital provides a variety of cash flow products to suit the unique business needs of owner operators, truckers and fleet owners
- eCapital provides friendly personal service
- eCapital provides freedom from paperwork and office hassles
- eCapital factors your invoices in rates that are fair and easily understood
- 30-day notice before termination
When owner-operators get the working capital you need, when you need it, business becomes successful.
eCapital provides the most promising factoring for owner operators because as an owner-operator looking for excellent service, eCapital gives you a personal account manager, high advance rates, same-day funding, online account access, also fuel discount cards. This is why eCapital provides good factoring for owner operators.
Our review found that eCapital’s freight factoring service combines low rates with friendly customer service. It’s a good factoring company for new owner-operators.
8. St.John Capital
Factoring Rate 1%, 100% Cash Advance Program
St. John capital has a 100% Cash Advance Program that advances to truck drivers or small trucking businesses who normally must wait for 30, 60, or 90 days for payment. The advances (40% for pick-ups and 100% on deliveries) can be sent right to a bank account or fuel card.
Review and rating for ST. John capital is Birdeye 4.5/5, BBB F not accredited. This is why St.John capital provides factoring for owner operators
Saint John’s live load tracking technology permits trucker drivers to track loads through periodic emails (every 15 minutes) relaying on pausing, proof of pickup, and delivery information.
In addition to factoring St.John capital provides load boards, fuel cards; small business debit, and credit cards. They also provide broker credit checks and information on millions of real-time loads.
- St. John capital provides direct pay from your mobile no mailing BOL or no invoicing
- St. John capital allows you to factor invoices you choose (no requirement of all factoring all invoices)
- At St. John capital cash advances are received on the same day when the freight bill is submitted by noon
- At St.John’s capital they provide 40% advances for pick-ups and 100% upon delivery.
- St.John’s capital provides fuel cards that can be used at 5200 truck stops, the fuel card also has a 24/7 call center and short 30-day contracts.
- 1.95% factoring fee is a bit steep.
- Credit card rates can be high and are variable.
- Fuel cards must be used where Visa is accepted
- Setup Fee one-time UCC fee of $295
Our reviewers found out that Saint John’s has a quick and no-questions-asked cancelation policy for factoring contracts at any time without a termination fee. These features make St.John capital top best factoring company for new owner operators.
The features loved by their customers include:
- No questions asked termination of contracts without fines
- Virtual Dispatcher
- Load boards with plenty of live loads
- 100% advance facility
- Line of credit
St. John has a very good factoring company they also provide fuel cards and debit or credit cards. This is really helpful for owner-operators to save money.
Get the RIGHT Factoring Plan BEST for Your Trucking Business– Apply now for MaxTruckers Consultation
9. Compass Funding Solutions
Factoring rate 2.25% to 2.5%
Compass Funding Solutions (CFS) has experience of 20 years. They make factoring a simple experience for owner-operators. They provide factoring for new owner operators, which is their core competency.
CFS turns invoices into cash within minutes. Many transportation companies received same-day cash, excellent customer service, and expandable growth through Compass Funding Solutions.
Customers love them because:
- it’s simple to set up an account with Compass Funding. Access account from anywhere using your mobile
- 20 years of experience
- Zero obligation or fee to see if you can factor with Compass Funding
- Compass Funding combines insurance, factoring, and payment service to bring you huge savings
- CFS provides fast, seamless, and frictionless conversion of invoices into cash
- CFS provides same day funding
- CFS has no fee to apply or accept the line of credit
- CFS provides fuel cards and nationwide discounts
- Termination Fee $2k to 5K
- Fuel cards with savings from 18 to 25 cents per gallon
Because Compass Funding Solutions emphasizes client requirements they are able to deliver fast, streamlined, and frictionless factoring for new owner operators, truck drivers, and freight business owners.
Compass Funding has a very poor performance in customer reviews. (Google Review 3.5/5)
Plus they have a termination fee of $2k to 5K, which is big thumbs down. So, we don’t recommend Compass Funding Solutions.
10. Triumph Business Capital
Factoring Rate: 2.99%
Triumph Business Capital is a Texas headquartered company providing business finance across the US. They have been accelerating the growth of Small and Medium businesses since 2004.
We found out that Triumph provides industry-specific funding options to truck drivers, small trucking businesses, freight brokers, government contractors, owner operators, and more.
They provide an attractive assortment of services like equipment financing, fuel cards, and vehicle insurance.
Perfect for truck drivers and usable for every other industry. Triumph excels with its mobile app which is responsive and rich with information about your specific factoring requirements. Triumph also provides top-notch back-office solutions.
One of the main problems of Triumph is opaque fees and sub-par customer service.
Whether you are a trucker, a broker, or just a small business looking for a fast cash injection, Triumph will be able to help you.
- Triumph provides fast and flexible finance
- Triumph helps you to track your funding in real-time
- Triumph allows you to stay away from loans or debt
- Triumph helps you to stay on top of the paperwork
- Triumph provides tailor-made solutions for your industry
- Fees can reach as much as 4% of the factored invoice, per month
- You’ll require a personal credit score of at least 500 to be eligible
- You’ll need to have been in business for at least a year
- Fees lack transparency
Our reviewers found that to onboard as a factoring client of Triumph business capital, you need to have these qualifications:
- At least 500 or more as personal credit score
- $100,000 minimum turnover
- You deal in B2B transactions and issue customers with invoices
- Invoicing clients ideally at least $10,000 every month
If your business has all these qualifications you can have Triumph’s fast and flexible finance.
Customer reviews point to a less robust and reactive customer service crew. But they have a very robust and informative mobile app that keeps you in the loop about your transactions.
Triumph goes the extra mile in service of its clients, they offer fast credit checks and they offer superior back-office solutions for truck drivers. They also let you have top-class insurance with their partnering insurance providers.
Factoring fees are a bit steep, it can go up to 4% of the factored invoices. A business should be at least one year old to be eligible for factoring services.
And as a business owner, you need a personal credit score of 500 and above to qualify for factoring services.
Factoring Guide for New Owner Operators:
What is a factoring company for the trucking business?
Truck factoring or freight factoring is the process in which an owner-operator or a trucking company sells an outstanding truck freight bill to a factoring company for a cash advance.
Factoring companies generally pay up to 98% over these invoices on the same day.
This helps owner operators and trucking businesses to get money immediately instead of waiting for the brokers for payment that takes weeks to months.
In this way, a factoring company helps trucking in good cash flow.
Truck factoring is not a loan. Factoring helps truckers or carriers to get working capital fast and cheaply.
A factoring company in the trucking industry buys invoices and funds them the invoice amount minus a factoring fee.
Example of a factoring process in trucking:
ABC trucking business generates an invoice of $1000 by delivering a load from a Freight broker.
In this situation, the ABC trucking will have to wait for 30 to 90 days to get the payment of the invoice.
This will dent ABC trucking’s cash flow.
So what ABC does is factoring or it sells its invoices to a factoring company at a discount of say, 3%.
Now, the factoring company after charging the 3% of the invoice value, gives him ($970) as advance money within hours of submission of the invoice.
So now ABC Trucking is happy as he has ready cash to meet all his expenses rather than waiting for the broker to pay him in 40 days.
Watch the video for more clarity on factoring for trucking companies.
The Process of Invoicing in Truck Factoring:
The factoring process in trucking is very simple and happens in minutes. That’s how you get paid in hours with a good factoring company.
The steps involved are given below:
- Driver pickups and delivers the loads to a customer (usual business)
- Post-delivery, he sends a copy of the trucking invoice to the factor via email, mobile app, or portal
- The factoring company verifies the delivery and the invoice submitted
- Post successful verification of the invoice, the factoring company cuts the invoice discount or the factoring fee and gives back 96% to 98% as advance (as agreed with the trucker)
- Later, the shipper or broker sends the payment of the truckload delivered to the factoring company
- Thus, truck factoring streamlines the payment process in shipper or broker to carrier interaction, allowing carriers or truckers to get invoices or bill money in advance to pay up their expenses.
What type of Factoring program should you choose – Recourse Factoring or Non-Recourse trucking factoring
Not all factoring is the same. And factoring companies factoring programs varies.
It is very important as an owner operator to know what type of factoring program you choose.
Else you will land in trouble later.
There are two types of factoring Recourse Factoring and Non Recourse Factoring. You should know the difference before you sign a factoring agreement.
Keep in mind both recourse factoring and non-recourse factoring in trucking pays you immediate cash.
Who shares the risk, carrier, or factoring company, in case broker payment happens divides the factoring program into two.
Let’s see what are they and which one is best for your trucking business.
(a) Recourse Truck Factoring :
In a Recourse Factoring Program, a factoring company pays you immediate cash against the invoice you submit.
But, if your broker defaults in payment to the factoring company or goes bankrupt, the factoring company is not responsible for the loss incurred, they will take the money from you.
This helps the factoring companies to avoid accountability for unpaid invoices from brokers or shippers due to bankruptcy or going out of business.
Since the risk factor lies with the trucking company, on the unpaid bills, most the recourse factoring programs are cheaper in comparison to a non-recourse program.
Recourse factoring is the most affordable option for businesses with credit-worthy clients (brokers) looking to increase liquidity or cash flow.
Factoring companies offer credit checking for all current and prospective customers (brokers).
While these credit checks reduce the chance of non-payment, you are ultimately responsible for any invoices that your clients leave unpaid.
Who should opt for Recourse Factoring Company for Trucking?
Recourse factoring is best for trucking businesses who…
- Has low risk, creditworthy clients
- Want to avoid extra fees which come with nonrecourse
- Want to sell invoices at the lowest fees or discount
- Wants to get maximum cash for the sale of invoices
- Can pay back or exchange other invoices if your client defaults
Advantages of Recourse Factoring Company for Trucking
- Recourse is less costly than non-recourse factoring
- The approval process is pretty fast
- More cash while converting bills and invoices
- Robust factor credit checks and payment history verification reduces default risk
Disadvantages of Recourse Factoring Company for Trucking
- Factoring companies have the right of recourse if your client or shipper defaults.
- As you have provided your business income or bank account. Your credit history will be affected if you are not able to pay back the default or offer an invoice of equal or greater value as an exchange.
- Less stringent credit checks compared to non-recourse because the factor is assuming less risk
(b) Non Recourse Truck Factoring :
A Non-Recourse Factoring Program takes the risk away from trucking companies if a freight broker or shipper fails to pay an outstanding invoice.
Nonrecourse factoring protects the trucking company from the risk of customer insolvency and places the responsibility of repayment on the factoring company.
In non-recourse programs, factoring companies generally will charge a higher fee of about 3% to 5%.
Non-recourse is beneficial to trucking companies who depend on a few large brokers or shippers for their loads.
Nonrecourse factoring protects truckers and owner-operators from the bad effects of a client’s nonpayment of an invoice.
If you don’t want to take the risk of liability, nonrecourse factoring will suit your business.
Who should opt non-recourse factoring company for trucking?
- If you are a new owner-operator, with less business experience you can’t judge your brokers
- Don’t know the credit-worthiness of your clients
- Don’t want to take risks in business that in the future may halt the entire trucking business
Advantages of Non-Recourse Factoring Company for Trucking
- Improves your cash flow
- Protects you from invoice nonpayments of brokers
- Price is similar to the cost of regular factoring
- Allows you to provide payment terms to clients
- Relatively easy to get
- Can be used as short-term funding
Disadvantages of Non-Recourse Factoring Company for Trucking
- The level of bill default protection varies by company
- The factor will be very careful before funding your account
- Factoring costs more than recourse financing companies
- Non-recourse is not available for high-risk or low-rated debtors, customers or shippers
If you need to know more about Recourse Factoring Company and Non-Recourse Factoring Company watch the video below…
How much do trucking factoring companies charge?
Freight factoring charges are based on a percentage of the load or the invoice amount.
The cost of factoring or factoring fee, discount or cut depends on the factoring type (recourse and nonrecourse) or the factoring company you choose.
The normal rates may vary from 1% to 5% on invoices or bills discounted.
Multiple factors influence your factoring rate with a factoring company, including the credit score, creditworthiness of your customers, the credit history of your business, the volume of invoices you’ll submit, etc.
Before you commit to a factoring company contract, you should be very clear on the contract terms, the fees, contract duration, contract termination fees, etc.
IMPORTANT: Never go with a factoring company based only on the factoring fees. We have seen many trucking businesses getting stuck with a factoring company even if they wanted to exit from the program, due to harsh contract terms that the factoring salesperson may hide.
Should You Choose a Factoring Company for Trucking?
Straight away, the answer, if you are a new owner operator answer, is YES. Because you need cash flow that too continuous cash flow. The moment a cash crunch comes, the risk of business failure is going to shoot up.
If you have enough cash reserve for your trucking business for 2 to 3 months, don’t take factoring at all. Because your money will help in the cash flow.
If you have a trustful broker who gives the Quick Pay option for the loads and he is 100% trustful, you don’t need factoring.
In all other trucking businesses, we advise having factoring.
Saying this let’s evaluate the merits and demerits of truck factoring.
Benefits of using a factoring company for trucking:
- Working capital optimization
- Credit protection against broker bankruptcy and payment delays
- Efficiency in sourcing new customers using up-to-date credit information and experience
- Credit and receivable management
- Cash-flow optimization
- More time to focus on core business operation
Disadvantages of using a factoring company for trucking:
- The factoring company takes a cut, discount or fee from your net invoice amount. This reduces your profit margin
- The factor will not fund you if your company has taken a load from a broker or shipper who has a low credit rating. Here you have to be very particular about who you get loads from.
- On account of nonpayment of invoices and bills from a broker or shipper. You will have to bite the bullet and pay back from your account if you have gone for a recourse factoring.
- Some of the brokers and shippers will love to work with you directly, using quick pay, etc.
- Brokers or shippers or the companies that provide loads must not be forced or pestered by tele-calling or they should not feel their arms are twisted to make the payment. They should be allowed sufficient time to make the payment
Know about the Various Factoring Traps Used by Few Truck Factoring Companies:
As a new owner-operator, you have to safeguard your trucking business as trucking is your bread and butter.
Few factoring companies may put you in trouble if you are not vigilant enough.
Let’s now talk about a few factoring pit-falls that owner operators land into…
Contract Lock-In Period – Factoring Duration Commitment
When you choose a factoring company always ask about the factoring contract duration.
Sign any sort of document only once you are clear with it.
Some factoring companies may lure you with an extremely discounted factoring rate, say 1%, but they will hook you up with them for years with a lock-in clause that you have signed.
Since the lock-in period is in place, to get out of the contract you may have to give a contract termination fees that even go up to $10000.
So it is advised to avoid a factoring company that has yearly or half-yearly contracts.
Ask the factoring company what are the terms, if you leave early is there a termination fee
You should have an easy entry and easy exit and zero termination fee.
Monthly Minimum Load Value and Minimum Factoring Value Per Invoice
These are other clauses you have to be very clear about before signing a trucking factoring document.
Monthly minimum load volume – The factor will say you need to factor with us a minimum amount of $…… worth of invoices. In case you are not factoring in the minimum amount with them, you need to pay them a fine.
Minimum Factoring Value per invoice – This is another trap. you must avoid it.
If you factor with a company and you submit a $500 invoice, in ordinary cases, you need to pay $17.5 as a factoring fee, but here if the factor has a minimum factoring fee of $25 per invoice, you will be forced to pay $25.
An owner-operator who does short hauls needs to be mindful of minimum load volume or minimum factoring fee.
Always look into the contract the following, which may burden you later…
- Is there a setup fee with the factoring company (some will charge you the same post invoicing)
- Is there a paperwork processing charges (even we don’t know why some charges like this)
- Credit check fees (it is the duty of a factor to do a credit check, never could understand why some charge trucking businesses for it)
- Be very clear on the fees levied on funds transfer or bank transfer modes.
How To Choose A Factoring Company For Trucking?
Watch the video below to get an in-depth insight into factoring. Based on the points mentioned by MaxTruckers CEO, Jerry Jose below is the 09 factors you should consider when choosing a factoring company for trucking.
1. Speed of Advance Cash
Good factoring companies have their systems in place so that you get the advance amount within 24 hours. Some are so robust that advance against the freight invoice is paid in 6 hours.
If you find that your factoring company has delayed payment practice of more than 24 hours it is time to switch the factoring company.
2. Fast & Hassle-Free Approval
Your factoring company has to ensure that the approval process is smooth and easy. It is the creditworthiness of the customers that they have to be worried out, not yours. Good factoring companies approve fast after checking the creditworthiness of your customer.
Also, there should not be any hidden fees in the process.
3. Good Customer Support
Many good factoring companies have a dedicated account manager for your needs. It should be easy to reach them, they should be patient and interested in the service to you, and should answer all your queries. Truckers generally have very long-term relationships with the factoring companies based on the service offered.
4. Recourse and Non-Recourse Factoring Choice
A trucker should have the option of choosing between recourse and nonrecourse factoring.
All rate differences between recourse and non-recourse factoring should be put across clearly.
A choice can help you save money when you are confident with your customer’s credit history.
If you are sure of the credit history of your customer choose recourse factoring.
In case if you are in doubt about your customer go with non-recourse factoring where the risk is with the factoring company.
Nonrecourse could be expensive but you get out of trouble in case of a default by your customer.
5. Fast Paperwork
Getting speedy approval and cash is the top priority for truckers.
Go for a factoring company that accepts digital copies in the form of scans for funding.
If a factoring company is asking for originals, you know how painful it is going to be.
Fast cash is essential for truckers. That’s why it’s important to find a truck factoring company that accepts copies, faxes, and scans for funding. Submitting originals for funding isn’t just a pain, it’s also expensive.
6. Contract Terms that Favours the Truckers
You have to be very diligent and check the contract thoroughly before you enter into a contract.
Many truckers fall into the trap of a year-long contract. And they will be dictating the terms. Even if you are unhappy with them you will be bound to stick to them, can not switch to a factoring company.
How ridiculous is it…
We suggest going with a factoring company that offers a month-to-month agreement.
Don’t worry there are many good factoring companies that give this flexible option.
7. Load Volume Requirements
Some factoring company for trucking asks for minimum monthly volume requirements.
That is absurd…
You should have the freedom to choose on which freight invoice you need money from factors and what type of factoring is required.
If you are so sure that your customer is genuine and they pay on time, you don’t have to factor in those bills.
You should go with a factoring company that is ready to give funding based on your needs and is flexible.
8. Fuel Advances
You might be in need of money to fuel your vehicle for transportation.
Good trucking factoring companies provide up to 50% cash advance for fuel upon pick up of a load.
This ensures you have enough cash with you for fueling and can go with loads that pay you higher.
9. Fuel Card Programs
If you get a Fuel Card from your truck factoring company it is going to be an additional boon.
It gives you large fuel discounts at all major truck stops and travel centers across the United States and Canada.
A fuel card is like a debit card that a driver uses to pay for fuel, repairs, and other items.
Also, fuel cards can be used to pay drivers through cash withdrawals.
The cards are set up through the fuel card company. But, the funding is generated through the factoring agreement.
Ensure your factoring company gives a good fuel card that has attractive discounts on fuel and has additional services.
10. Additional Benefits
Some factoring companies give many additional benefits to truckers.
But keep in mind your priority should be smoothness in business that is given from Point 1 to Point 9.
Some factoring companies cheat truckers by projecting the additional benefits and luring them to business, where the key factors are disadvantageous to them.
If all the non points are fine, then it is a bonus to have the additional benefits.
Some of the additional benefits often provided by truck factoring companies are the following:
- Free credit checks
- Freeload board access
- Online account access
- Professional collections services (in case needed)
- Insurance Assistance (for new trucking companies)
- Control & Monitor of carrier spend
- In case of unexpected expenses sending fast cash to carriers
- Discounts on tires, repairs, maintenance, lodging, etc
11. Freight Factoring Rates
Without a doubt, the cost is the most important factor when you choose a factoring company for trucking.
How much should you pay them?
As a common practice truck factoring companies calculate the invoice factoring rates based on billing volume.
When the volume of the bill is high, the factoring rates will be low.
There are many factoring companies that provide a flat fee structure without any reserve. Meaning, you can pay a one-time fee irrespective of how long your customers take to pay.
Also, here you get the full advance upfront.
Truck invoice factoring rates also vary based on the type of factoring – recourse or non-recourse program.
- Non-recourse trucking rates can range from 3% to 5% on an average for 1 to 5 trucks.
- With 5-10 trucks, non-recourse rates range from 1.5% – 2% is also available.
- Recourse factoring rates range from 2% to 3% for 1 to 5 trucks.
- With 5-10 trucks you can find funding that ranges from 1%-2%.
The rates given above are approximate. It varies depending on the Factoring Company, the contract you are entering, and any special deals.
If you need a responsible, proactive, and helpful dispatch partner please click check this out dispatch assistance from Maxtruckers.
Is a factoring company for trucking worth the hassle?
Factoring is a very vital part of the trucking ecosystem.
Owner-operators will be stuck if factoring companies don’t provide liquidity or cash flow by discounting trucking invoices.
A good factoring company provides recourse and non-recourse programs increasing the flexibility of the owner-operator.
Good factoring companies provide month-on-month contracts with no strings attached.
They also provide robust customer service.
They don’t charge hidden fees, no monthly minimum, no setup fee, no termination fee, no minimum funding fee, etc.
FAQs on Factoring for Trucking:
What are typical factoring rates?
In the transportation industry, the factoring rate is 1.15% – 5% and advance rates are 95% – 99.5%.
Are factoring fees, setup fees, and commissions tax deductible?
Yes, factoring fees, setup fees, commissions, etc are tax-deductible.
Are factoring companies bad?
Factoring helps you generate cash flow without much pain, it’s a vital service for trucking companies. But since factoring is an unregulated industry, there are very good factoring companies and ones that nickel-and-dime a company to death with fees and poor customer service.
Can you have two factoring companies?
You will never be able to use two factoring companies at once. Contracts with factoring companies have a termination fee and period, if you want to move to another factor leaving your company, you can ask for a buyout.
Is a factoring company worth it?
Although you pay .75% to 5% as an invoice discount to a factoring company. You get working capital instantly, the factor helps you to overcome cash shortfall. Factoring is faster and cheaper than a bank loan or quick pay offered by freight brokers.
Should owner operators go for factoring?
Yes, for sure factoring gives a lift to the dreams of small owner operators or truckers. If there’s no factoring there is no liquidity or cash, this injection of cash helps you pay drivers, pay off operational expenses, find the money for fuel and maintenance and upkeep, etc.
How fast do factoring companies pay?
When you submit your invoice to the factoring company, you get your payment the same day or the next day.
Why do carriers need a factoring company?
Carrier gets paid by the client or shipper between 30 to 90 days. Cash working capital management is a stressful process, a factoring company takes the stress away from truckers,fleet owners or owner-operators.
If you are engaged in a factoring relationship with a factor, freight bills due you can be handled in a timely fashion
How do I choose a factoring company for trucking?
Industry Expertise: Factoring firms come in all different shapes and sizes, you need to select a factor that will work for hand in hand with you to solve your challenges.
Flexibility: The second thing to consider when shopping factoring firms is the amount of flexibility it offers to its clients. The factoring company you choose must tailor-make their offering to your particular challenge.
Customer Service: In the business world, time is money, so you need to have efficient, robust, fast, and problem-solving customer service.
Stability: The factor should have good standing, experience, and liquidity. Then your transactions with it will go through and you as a trucking business will benefit from it.
Pricing: 1% to 5% deduction for invoices is an industry norm, anything beyond it is costly and not sensible.
How do you get out of a factoring contract?
You as a trucker or fleet owner need to give a written notice to terminate the contract. Factor expects the notice to be given from your side usually within 30 – 60 days prior to the renewal date.
You need to make sure whether the notice of termination needs to be snail-mailed or electronically sent.
Who bears the cost of factoring?
The cost of factoring invoice for trucking is the same for 5days or 90 days. Your factor quotes a flat rate for factoring service. Regardless of when the customer, shipper, or broker pays, your company pays a flat factoring rate. Thus, your factoring rate is fixed.