What is Truck Factoring?

It is not uncommon for those in the trucking or freight industry to face challenges that cause a restriction of cash flow. And, unfortunately, when it happens, it only leads to more difficult challenges — without any sign of reprieve. 

Many find relief with truck factoring. 

Sometimes referred to as freight factoring, truck factoring is a means of increasing cash flow for trucking companies. What is truck factoring and why do people do it? Let’s take a closer look at the practice. 

What is Truck Factoring? 

Truck factoring is when a trucking company sells its outstanding invoices at a discounted rate. A factoring company will purchase the invoices for a percentage of their total value, typically at about 80% to 90%.

This gives the trucking company cash flow that they otherwise wouldn’t have while waiting for their invoices to be paid. 

Once the payment from customers is received and the invoice is paid in full, the factoring company will turn over the remaining balance to the trucking company, minus a small fee that is due for their services. 

Is Truck Factoring Right For You? 

If you engage in B2B commerce as most trucking companies do, then you likely send out invoices to your customers and wait for payment. This would make you a good candidate for truck factoring. 

Those who typically take advantage of truck factoring, however, are often: 

• New business owners
• Unable to qualify for traditional bank loans
• Dealing with rapid growth
• Have seasonal sales 

Truck factoring can set your balance sheet right and give you the cash flow you need while you focus on your business. 

How Truck Factoring Can Benefit Your Business

What makes trucking companies or transportation companies in general turn to truck factoring? Believe it or not, this practice comes with a long list of key benefits that can make getting through day-to-day operations much easier. 

Positive Cash Flow

Truck factoring provides you with elevated cash flow. 

In the trucking business, you need cash just to keep your operation flowing. Think about it —- you need to cover fuel, equipment, insurance, repairs, and even payroll. While you have earned the money, you don’t have it. Rather, it is still sitting in a stack of unpaid invoices that will not help you get some diesel for your next job. 

No Collateral Required

There is no collateral required for truck factoring. This means the money you need for your business is much more accessible without having to go through the traditional process of taking out a loan through a bank. 

Minimize Stress, Maximize Growth

You have someone else handling your outstanding invoices while you are already enjoying the benefit of getting paid. 

You no longer have to worry about making ends meet which allows you to switch your focus to one of expansion and growth. You can take on new work and build your business knowing that your outstanding invoices are being handled. 

Get Invoices Paid

What’s more, when you work with the right factoring company, they will handle getting your invoices paid — including the processing and any necessary collection efforts. This frees up your time and resources. 

Truck Factoring at 10-4 Financing

Want the cash you need to grow and succeed? Then you need 10-4 Financing on your side. Contact us today to get started.