Many small fleet operators work very hard to grow their trucking operations by actively securing jobs on load boards, seeking long-term client contracts, and earning a solid reputation. But growth for smaller trucking operations often means finding ways to cover fuel-related expenses. A similar problem can exist for newer businesses or owner-operator set-ups.
Fuel advances are becoming an increasingly popular solution for smaller companies. Because of the potential drawbacks associated with fuel advances, however, it’s important to know how to use them wisely. Here’s what you need to know.
A fuel advance is an additional service offered by some freight factoring companies. It’s a fairly simple premise. The company advances funds to an owner-operator or small fleet owner after their load has been picked up. The advance is meant to cover the costs of fuel and any other expenses related to delivering the load from Point A to Point B.
There’s no question that a fuel advance can provide welcome relief for smaller operations short on funds or newer companies still building up their profit margin. And if you strategically use fuel advances, they can be a much-appreciated asset for your business. In general, fuel advances may benefit your smaller operation under the following circumstances:
A fuel advance can provide factoring clients with up to 40% of the value of your freight bill. This advance can be provided to your company within hours of making the funding request. To send the advance, the factoring company usually verifies that:
Once the load is verified, funds can be sent to your bank account via a direct deposit or can be loaded onto a fuel card.
Fuel advances are usually limited to about 40-50 percent of a traditional factoring advance. Also, a fuel advance will be part of any regular advance you may have received. This means you’ll need to pay factoring fees that may be related to it. Fees associated with advances can also be somewhat significant since they need to be quickly processed.
Plus, advances are given before the load is delivered, so there is an understandable risk for the factoring company. Also, there is paperwork that needs to be completed before an advance is given, and the load has to be verified.
Need some help paying for fuel? Pay4Freight is the freight factoring company you can turn to for a competitive fuel advance plan likely to fit into your budget. Pay4freight Fuel Advance program advances 50% of the load’s value up to $3,500. Fuel Advances are available on multiple truck fleets as well. We’re also your go-to source for advice on using load boards effectively and other reliable trucking industry insights.
Thinking of your next line of action? Take a look at this article and see reasons to factor with us, many truck drivers and trucking companies have trusted us over the years to handle their invoice factoring and fuel advance because we are the only 4.9 stars Google rated freight factoring company Pay4Freight Google review. Why wait? Click here to fill a simple form and sign up with us today.