Answering Your Top Trucking Factoring Questions

Some of you are new to factoring. Factoring is selling your accounts receivables at a discount in order to control your cash flow. According to industry statistics, the average timeframe a freight invoice is settled is 34 days. That is a long time to wait to be paid. Please contact us and we will be happy to answer any questions you may have that are not covered in the FAQs section below.

Truck factoring helps trucking businesses like yours get paid faster. You sell your unpaid invoices to a factoring company, and they give you most of the cash right away. When your customer pays up, the factoring company sends you the rest, minus a small fee.

After delivering a load, you create an invoice and send it to a factoring company. They’ll pay you a big chunk of the invoice (usually 80-95%) up front. When your customer pays the invoice, the factoring company gives you the remaining amount, minus their fee.

Truck factoring helps you maintain a steady cash flow, so you can pay bills, grow your business, and avoid taking on debt.

Factoring fees can range from 1% to 5% of the invoice value. It depends on factors like the factoring company you choose, your client’s credit, and the volume of invoices you’re factoring.

Most factoring companies can get you the money within 24-48 hours after you send the invoice.

There are two types of factoring available to carriers.

Non-Recourse Freight Factoring: takes on the credit risk. Should the account fail to pay due to a financial reason, not carrier performance, will then take the full loss.

Recourse Factoring:

The carrier takes all risk of the broker or shipper not paying the factor for any reason, including credit loss. Typically, all recourse factors require the carrier to reimburse the factor in full after 90 days from the initial advance.

In order to move forward quickly, we need the application that’s attached completed for all owners over 25% and returned with the following:

  1. Copy of your FMCSA authority letter. You can click here to see if it’s been granted if you are not sure.
  2. Copy of your current liability/ cargo insurance certificate.
  3. IRS document showing your Federal Tax ID Number
  4. Copy of the principal’s driver’s license.
  5. Copy of the truck registration for each tractor in your fleet.

Once we receive all the required information we’ll quickly process for approval and sending out the factoring agreement and other forms. It’s very possible you could get approved and funded all in the same day, but normally within 24 hours. After that, your funded same day when your loads are received by 12:00 p.m. CST

We do have month-to-month agreements, however to get the absolute lowest fee you also have the option to enter into an annual agreement with us.

Our system allows you to submit your loads 24/7. However, our cutoff time to get your load into the system for same day payment is 12:00 PM Central Standard Time daily.

No factoring company will allow this. The reason is that the factoring company must hold first lien position on your receivables. This is simply protecting our interests on the loads we have purchased.

You don’t have to factor every customer. Once you have factored an invoice from a credit approved broker or shipper, you must factor all freight loads for that account until is paid in full with that account.

Yes, start-ups are eligible for freight invoice factoring! We love helping new carriers get on their feet!

No, never! However, by factoring more of your freight, you may be eligible for a better rate.

You have a variety of Payment Options

EFS Fuel Card: We will fund your Fuel Card account for a small $5 fee. You obtain the “cash price” at the pump at over 6,000 locations. Each transaction is $3 for fuel and/or cash or Transchecks plus rebates from 5 1/2 cents up to .55 cents plus per gallon at over 2,500 truck stops.

T-Cheks: These are filled out like any regular check, but require an authorization code that we provide to negotiate the check whether it be at any truck stop who accepts them or your bank. T-Cheks: Fee is $4.00 per transaction on the value of the check.

Direct Deposit: This transaction usually credits your account the next banking day, but could take an additional day for final credit. The charge for this service is $7.00.

Wire Transfer: Our charge for this service is $20.00 plus any fees your bank charges you to receive the funds.

Same day funding provided all documents required for billing are received by 1 PM EST and are verifiable.

Factoring is an excellent way of getting money fast to manage cash flow to pay for operating expenses without creating debt. You could go to a bank and try to get a loan, but there’s no certainty you will be approved. And even if you are approved, you may not be able to get additional loans for critical equipment such as trucks or trailers.

Because you are factoring your outstanding freight invoices, we are focused on your customers’ credit. Plus, a good factoring company will also take the hassle of collections off your back and provide you with important back office support services.

One of the many benefits of being an Pay4Freight client is that we make it easy for you to stay updated on the status of your factored invoices. We provide a user-friendly online account system that features a wide variety of reporting and informational tools. We want to make it easy for our clients to be completely informed about their customers and invoices.

Absolutely. In fact, our fuel card is one of the most popular programs we offer because it’s one of the best in the trucking industry. Our fuel card gives you access to fuel discounts at almost 2000 locations across the United States, including Love’s, Petro, Pilot, and others.

Pay4Freight will handle all collections to make sure payment is received as quickly as possible. We’ll document all payments we receive so you’ll know when and how we collected on your invoices. This will save you time, hassle, and the expense of managing your own collections.

Should your customer ever mistakenly make an automatic payment into your account, you must immediately forward the payment directly to Pay4Freight. It’s important not to deposit a check or accept a payment from a customer that you’ve factored with us.

That won’t be a problem. We can work with your current factor to make sure the buyout and transition processes goes smoothly.

Still interested in learning more? Have a look at our freight factoring guide to get the a to z fundamentals.