Trucking factoring, also known as invoice factoring, is when trucking companies and owner-operators sell their invoices to a factoring company for instant funding after they've delivered goods. This allows trucking companies to manage their cash flow while they wait for payment from shippers or freight brokers.
12 Best Invoice Factoring Companies for the Trucking Industry:
Trucking Factoring Company
0.25% – 1.1% per week
$5,000 to $5 million
Starting at 4.66% of invoice amount for 12-week repayment
Up to $100,000
Starting at 1.0%
Oakhill Capital Corp
Starting at 1.0%
$25,000 to $10 million
Starting at 0.8% of invoice amount for 30 days
$5,000 to $3 million
Paragon Financial Group
1.25% – 2.0% invoice amount for 30 days
TCI Business Capital
1.0% – 4.0% per month
$50,000 to $20 million
1.0% – 6% per month
$50,000 to $5 million
0.5% – 5% per month
$30,000 to $5 million
Starting at 1.0% per week
Up to $100,000
Trucking Factoring Companies FAQs:
How much does trucking factoring cost?
Freight factoring companies typically charge between 1% – 6% based on the total value of your invoice amount which can be paid either weekly or monthly. Your advance will depend on the length of time it takes for your client to make payment (usually within 30 - 60 days).
How does trucking factoring work?
Trucking factoring (a.k.a freight factoring and accounts receivable factoring) is a financing option that allows trucking companies to be paid immediately for services rendered. A factoring company will fund between 80% – 90% of the invoice amount within 24 hours and then pay out the remaining amount, less any fees, once the client has paid off the invoice. Trucking factoring is beneficial for small owner-operators as it enables them to take on additional work in the interim and manage cash flow.
What are the minimum requirements to qualify for freight factoring?
Qualifying terms vary from company to company, but the minimum requirements are that your business has been in operation for at least 3 – 6 months, your annual revenue is at least $20,000, and that you've not had bankruptcies within the last two years.
What are the pros and cons of accounts receivable factoring?
- Provides you with cash immediately.
- Maintain cash flow.
- Allows you to offer payment terms to clients.
- Easy to obtain compared to a business loan etc.
- Invoices are used as collateral.
- Allows you to outsource a time-consuming task.
- Fees can be steep for a small business.
- You may be liable for unpaid invoices.
- Your customers' payment history will be checked.
- You are forced to hand over financial control to a third-party.
How do I choose a factoring finance company?
It's important that do your research and not rush the process when looking at freight factoring companies. Here are a few things to consider:
1. How long has the factor been in business?
Choose a factoring company that has been in business for a few years and has experience in dealing with small businesses like yours.
2. What are the terms and rates?
Consider a factor's fee structure and payment terms carefully and be wary of those with extremely low factoring rates –- they could make up for it by lumping you with hidden fees or charges.
3. Does the factor offer recourse or non-recourse funding?
Although a recourse loan is more cost-effective, the business owner is required to provide a full refund if the invoice is not paid by the customer. Because you are assuming all risk, rates are generally lower. With a non-recourse loan, the factor assumes all risk but will inevitably charge higher fees.