What is hotshot factoring?

Hotshot Truck Factoring in Trucking to Get Paid Fast

If you are a hotshot truck owner, after plying truckload you need to get paid. Typically, brokers and shippers take 30 days to 60 days to pay you.

But, you have to meet your day-to-day expenses like fuel, maintenance, etc. This makes Hotshot truck owner operators suffer from serious cash flow problems as your payments are delayed for a long period.

Here Hotshot factoring comes as a rescue.

Hotshot factoring is the process of submitting a trucking invoice to the factoring company after plying a quality load and getting paid from the factor in the same day. The factoring company levies a small fee against this process.

Factoring is a very fast process, no original BOL/invoice is asked for.

As a trucker, you can upload your invoice copy through a web portal, you can also snap photos of the invoice and upload them using the mobile app or you can attach the invoice in email and send it to the hotshot truck factoring company.

And within hours you get paid.

How does hotshot factoring ease trucking business cash flow issues? 

Hotshot factoring, liquidity, and cash flow solution

Many drivers/owners will be affected by cash crunch or working capital shortage if there is no factoring.

After pulling a load for brokers/shippers a carrier usually has to wait for the payment cycle to complete to get paid i.e. they have to wait 30/45/60/90 days to expire after generating the invoice to get paid. 

This creates a working capital shortage, truckers need working capital to pay for fuel, equipment maintenance, upkeep, driver salaries, accommodation, supplies, insurance premiums, etc.

The solution for the working capital shortage is that a hotshot operator can submit their trucking invoice to get paid after the factor deducts the cut/commission which would be 1.5% to 5%, which is dependent on volume and size invoices submitted.

A hotshot factoring company also helps hotshot truckers and owner operators to do carrier side works and secretarial paperwork.

How do you select a hotshot factoring for your business?

Selecting a hotshot factor for your trucking business:

To select a hotshot factoring company you need to keep in mind certain factors:

Firstly as a hotshot operator, you need to know what are the prevalent factoring rates. The factoring rates are normally between 1.5% to 5%, the rate depends on the size and volume of invoices factored.

Secondly, as hotshot operators, you need to know, if there is any lockin period such as 3/6/12 months, this must be mentioned in their factoring contract. You should go for a month-on-month factoring contract.

Thirdly you need to know if there is a termination fee for an early exit from the contract. Usually, it’s a hefty sum of money, which would burn holes in the trucker’s pocket. 

Fourthly you need to know if there is any minimum factoring volume, your factor should not dictate how much you can factor?

Which invoices you should factor?

Or should you factor full or partially etc?

You need to read the contract fine print to know if there is a minimum factoring volume.

Fifthly you need to have a robust. Responsive, helpful, and problem-solving customer service. As many truckers/owners go for long-term contracts with their factor, the factoring company should provide a dedicated support staff to cater to and answer the queries, doubts, and issues of their customers. 

Sixthly, you need to see if there are any hidden charges like credit check fees, you need to read the fine print and ask doubts to your factoring executive to know more about hidden fees.

Seventhly, You need to know if there are any reserves that the factor cuts from the invoice amount, this reduces the factoring amount you get from your factor.

Lastly, you need to also know what are the extra benefits that the factoring company provides you like fuel line of credit, fuel card, load board, insurance, bookkeeping support, load board, etc.

You should not choose a hotshot factoring only based only on the extra benefits but should thoroughly consider what extras are on the table.

MaxTruckers gives Free factoring consultation to Hotshot truckers. You get multiple hotshot factoring proposals from the top hotshot factoring companies.

What is the cost of hotshot factoring? 

Hotshot truck factoring fees

Factoring commission or cut is deducted before paying drivers/owners the factored invoice amount.

This cut/commission is about 1.5% to 5%, depending on the hotshot factoring company you choose, volume, and size of the invoice factored. 

There is also a reserve associated with factoring with some hotshot factoring companies. Some factors deduct it from your invoice amount and it’s paid back after the client/broker/shipper pays you the invoice amount.

MaxTruckers helps hotshot owner operators to choose the best hotshot factoring, apply for a free hotshot factoring consultation now.

What are recourse and nonrecourse hotshot factoring?

Choose the right hotshot truck factoring program

Recourse factoring is a kind of factoring where you are responsible for your clients/brokers/shippers invoice payment.

If you take recourse factoring as the factoring option, then if your customer doesn’t pay your account will be debited by the factoring company.

Recourse means less risk for factors, so they take it easy on credit checks and due diligence. As a hotshot owner, you can use this factoring method if you have credit-worthy shippers/brokers.

In non-recourse factoring, the factor covers the shipper/broker default of the invoice.

Here, the factor takes responsibility for invoice payment.

If your customer default because of bankruptcy or insolvency or if there is an instance of default from your customers you are 100% risk-free. It is the responsibility of the hotshot factoring company to solve the issue.

Nonrecourse is costly compared to recourse.

This is because the hotshot factoring company is taking the risk of your client’s payment default.

Is hotshot factoring worth it?

Do Hotshot Truckers Really Need Hotshot Factroing

Factoring creates working capital or liquidity in a trucking business, making it essential for a successful trucking operation.

If there is no factoring the hotshot operator will face a cash crunch which is bad for any trucking operation because there are expenses, fuel, maintenance, driver salaries, accommodation, food, supplies, etc, that a hotshot operation should pay for. 

Alternative to factoring is working capital loan and Quick pay.

The former is very costly considering the interest and it takes a long time and the process is cumbersome.

Quick pay is a good option but not all brokers provide it and you might have to work with multiple brokers.

Plus, with quick pay the interest rate is high and you get paid in 7 days.

What are the merits and demerits of a good hotshot factoring contract?

Know more on hotshot factoring:

Merits of hotshot truck factoring

  • Easy way to inject liquidity into your business 
  • Trucking startup-friendly 
  • Low invoice/ bill commissions or factor cuts 
  • It’s a short and long term liquidity option

Demerits of hotshot factoring

  • Invoices must be paid in 90 days
  • Should have quality and highly creditworthy customers to start factoring
  • Control of accounts receivable is lost
  • Taking credit based on accounts receivables in hand is not possible

Benefits of joining MaxTruckers hotshot factoring

How MaxTruckers helps you in selecting a hotshot factoring program?

Free Factoring Consultation Giving You Factoring Proposals of Best Hotshot Factoring Companies

As a hotshot trucker, your operations and requirements are very different from other truckers.

Max Truckers gives you proposals that fit hotshot factoring from the industry top rated factoring companies for potshots after your hotshot factoring consultation.

You get 2 to 3 hotshot factoring proposals from verified hotshot factoring companies

Fuel card for Hotshots

MaxTruckers gives you a very useful fuel card that provides 35 cents to 45cents discount on a gallon of diesel. TCS fuel card gives freedom. Flexibility and saving. This card is accepted at 1000 odd truck stops and fueling stations, The card gives a discount for repair and maintenance, roadside assistance, tire, and oil change discount, driver accommodation and supplies discounts, etc.

Flexible Load Requirments Hotshot Programs

Max Truckers provide you with flexible load-hauling, there is no minimum load value that you must meet. This means you can factor in whichever load you like.

Positive Hotshot Contract Terms

At MaxTruckers don’t add harsh clauses or conditions in our contract that surprise and trouble you. We do not surprise you with hidden fees, termination fees or volume limits, etc.

Our contracts are conducive for young trucking startups and small trucking businesses.

Fast Paperwork

At Maxtruckers, we don’t ask for original invoices/BOL.

You can upload or snap photos of your invoice via a web portal or mobile app, or even send an email with a document attached to sort factoring paperwork. 

Best Customer Support

At MaxTruckers we provide dedicated, supportive, and problem-solving customer support. Our dedicated MaxTruckers buddy will help you onboard with a factor and help you to do preliminary tasks associated with factoring. We offer 24/7 support.

Access to MaxTruckers University

At MaxTruckers we provide a trucking knowledge portal that helps you to learn more about the trucking ecosystem and the elements in it. we share knowledge about trucking-related aspects like:

  • How to start a trucking operation?
  • What is the government certification you need?
  • How to save trucking cost a lot using smart tools like fuel card, coupons etc?
  • How to find brokers/shippers who work with new MC owner operators? 
  • Which load boards should you use?
  • How to find a good dispatch company?
  • How do you find loads to run?
  • How do you find comprehensive insurance coverage?
  • What are your bookkeeping requirements?

DAT Load board Subscription

At MaxTruckers we add value to owner-operators/truckers by providing 1 month free trial of the DAT TruckersEdge load board. A trucker can easily book loads using the load board and see if it fits his need or priorities. 

300 Member Broker List for New Hotshot MC owners

At MaxTruckers we know how hard is it for a new MC owner/trucker to get work. Brokers/shippers don’t appreciate working with new MC drivers/owner operators.

That’s why MaxTrucler has compiled a list of 300 brokers who are ok working with new owners/drivers.

Trucking Startup Friendly

As a trucking startup, you have to face heavy competition, unfriendly brokers/shippers, and harsh working conditions.

At max truckers, we know the challenges face by new owners/truckers, so we provide you 3-dimensional services such as trucking business consultation, business development service, insurance, factoring consultation, load dispatching, load board package, and knowledge resource connected with trucking. 

MaxTrukcers provide you with tools, operational acumen and contacts to prosper in all facets of trucking.

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