The 4 Best Factoring Companies For Fleets, Owner Operators, & Other Trucking Companies
As the owner of a trucking company, you’ve probably encountered your share of challenges. From driver shortages to variable costs like fuel and tolls, the industry can sometimes be a bit unpredictable. One of the biggest challenges faced by trucking companies, though, is waiting to get paid. You could potentially wait for weeks (or even months!) to receive payments from your customers. This can cause cash flow issues that prevent you from growing your business or even covering operating expenses.
Fortunately, there’s a way to get paid quickly to keep cash flowing into your business. If you have unpaid invoices, give invoice factoring a try.
You can have access to instant (or near-instant) cash instead of waiting 30, 60, or 90 days for your customers to pay. But what’s the catch? In this post, we’ll take a look at invoice factoring for trucking companies. We’ll discuss how it works, who qualifies, and the top lenders in this space. Whether you operate a fleet, are an owner-operator, or are involved in the trucking industry in another way, invoice factoring could give you the capital your business needs.
Read on to learn more about invoice factoring and how to put it to work for you.
Read more below to learn why we chose these options.
Table of Contents
- What Is A Factoring Company For Trucking?
- The Best Trucking Factoring Companies
- Invoice Factoring For Trucking FAQs
- Do I need a factoring company for trucking?
- What are the advantages of working with a freight factor?
- What are the disadvantages of working with a freight factor?
- How much does trucking factoring cost?
- How long does it take to set up with a factoring company?
- What should I look for when choosing a factor?
- Final Thoughts On Factoring Companies For Trucking
What Is A Factoring Company For Trucking?
Tired of waiting for your pay? Freight factoring may be the answer. Freight factoring means that you sell your invoices after loading, hauling, and delivering freight. Instead of waiting days — or even weeks — freight factoring puts cash in your pocket instantly without having to wait for your invoices to be paid.
In the trucking industry, it’s common to invoice customers. Even after the freight is loaded and delivered, your company must still invoice the customer. Depending on your payment terms, it can take weeks or longer to get paid.
Unfortunately, there are times when outstanding invoices cause problems for your business. If you have multiple invoices that haven’t been paid, your business isn’t bringing in revenue. A lack of cash flow can spell trouble for trucking companies — after all, you still have bills to pay. Luckily, invoice factoring (or freight factoring) for trucking companies gives you instant (or near-instant) access to outstanding funds from your unpaid invoices.
A factoring company for trucking pays you for your unpaid invoices in exchange for a small fee. Here’s how it works.
You sell your unpaid invoices to a factoring company. The factoring company pays a percentage of the value of the invoices to you immediately (typically within a few business days). The percentage you receive upfront varies but typically hovers around 85%. Next, the factoring company takes over in collecting payments on the purchased invoices. Once payments are collected, the remaining funds — minus a small fee, known as a discount rate — will be released to you.
The benefits of invoice factoring are that you no longer have to wait 30 days, 60 days, or even longer to receive payments from your customers. You also (in most cases) won’t have to worry about your personal or business credit score, putting up collateral, or meeting qualifying factors that play into other types of small business funding. Most factors consider the quantity and quality of your invoices when determining approval.
However, there are also a few drawbacks to note. Most companies charge a discount rate between 1% and 6% of the total value of your invoices per month. The longer your customers take to pay, the more this type of funding will ultimately cost your business. Like other forms of funding, it’s important to weigh out the pros and cons. While invoice factoring for trucking companies can get expensive, the cost may be worth it if your business is facing cash flow challenges.
Unsure if invoice factoring is right for you? Check out our post A Basic Introduction To Invoice Factoring For Businesses to help you make up your mind.
The Best Trucking Factoring Companies
We’ve found the best factoring companies for trucking that can help you get the funds you need for your business. Fleets, owner-operators, and other trucking companies can resolve cash flow issues by selling their unpaid invoices to one of these recommended factoring companies: Riviera Finance, Bluevine, and Lendio.
Riviera Finance: Best For Non-Recourse Invoice Factoring
Since 1969, Riviera Finance has provided factoring services to small businesses across America, including trucking companies. Here's what to expect from Riviera Finance:
- Type of factoring: Non-recourse; notification
- Borrowing amount: Up to $2 million
- Discount rate: 2%
- Percent of invoice received: Up to 95%
- Average time to funding: 4-7 business days
To get started, you can apply at one of over 30 local offices across the United States and Canada, or you can submit your application online. If you aren't ready to apply just yet, you can schedule a free consultation to learn more about Riviera Finance's factoring services.
- Time in business: N/A
- Credit score: N/A
- Revenue: N/A
There are no time in business, credit score, or revenue requirements to qualify. All you need are verifiable invoices or freight bills. There are no monthly minimums in terms of how many invoices or bills you submit, but you may be required to sign a contract. Most businesses have 6-month contracts with Riviera Finance, although the company will work with you to find a solution that's best for your business. Discount rates start at 2%, but lower rates may be available for your business.
Riviera Finance offers non-recourse factoring, so you won't be on the hook if your customers file for bankruptcy. You may still have to buy back your invoices in certain situations, such as if there was an error on the invoice. One thing to keep in mind is that Rivera Finance uses notification factoring, so your customers will be aware that you are using an invoice factor. If this is a problem for you, look for factors that offer non-notification services.
- Non-recourse invoice factoring
- Fast application & funding processes
- Receive up to 95% of your unpaid invoices/freight bills
- No credit score, time in business, or revenue requirements
- Only offers notification services
- Possible high discount rates
- Contract required
Bluevine: Best For High Credit Facilities
If your business has multiple outstanding invoices and many high-dollar freight bills, BlueVine may be the right option for you.
- Type of factoring: Recourse; notification and non-notification
- Borrowing amount: Up to $5 million
- Discount rate: 0.25% to 1.7%
- Percent of invoice received: Up to 90%
- Average time to funding: 3 business days
The amount that your business will be eligible to receive is based on a number of factors, including but not limited to your credit profile, transaction volume, and the creditworthiness of your customers. To qualify for Bluevine's invoice factoring, you must meet the following requirements:
- Time in business: 3 months
- Credit score: 530
- Revenue: $10,000/month
Bluevine offers recourse factoring and both notification and non-notification services. Agreeing to notification services may net you additional funds. There are also no contracts required.
Bluevine works quickly to give you access to funds. Initial approval takes about 24 hours, while the process of submitting invoices, getting them approved, and receiving money in your account may take around three business days. In addition to invoice factoring, Bluevine also offers business loans and lines of credit to qualified borrowers, which may open up more potential funding opportunities for your trucking business.
- High credit facilities
- Fast & easy funding
- No contracts required
- Can be expensive
- Must meet several requirements to qualify
- May have to agree to notification services to qualify for more funding
Lendio: Best For Comparing Lenders
It's always important to shop around before acquiring small business funding. Fortunately, you don't have to spend hours behind your computer screen comparing lenders when you use Lendio. Lendio is different because it isn't a direct lender. When you submit your application, you'll be connected to one or more factoring companies so you can weigh out your options. One of the financial products you can apply to receive is accounts receivable financing.
The specifics of your financing will vary based on the lenders you match with. Lendio is partnered with many top lenders, including Bluevine and Fundbox. Here's an idea of what you may qualify for:
- Type of factoring: Accounts receivable financing
- Borrowing amount: Varies
- Discount rate: Starting at 2%
- Percent of invoice received: Up to 90%
- Average time to funding: 1 to 3 days
Borrowing requirements vary by lender, but one thing remains consistent: collateral is not required and personal credit history doesn't play a large role in whether or not you're approved. If you want to compare options, Lendio can connect you with over 75 lenders in just minutes through its easy application process. And if you want other types of small business funding, Lendio has you covered, allowing you to seek out other options including equipment financing, short-term loans, and more.
- Competitive rates & terms
- Easily compare loan options
- Fast & easy application process
- Not a direct lender
- Only receive up to 80% of receivables upfront
Invoice Factoring For Trucking FAQs
Final Thoughts On Factoring Companies For Trucking
Unpaid invoices and outstanding freight bills don’t have to be a burden on your trucking business. With invoice factoring, you’ll be able to easily resolve cash flow issues, even if you don’t have perfect credit or are a newer business. One thing to keep in mind is that invoice factoring can get a little expensive, so make sure to fully explore your lender options and weigh out the pros and cons of this type of funding before submitting your invoices.
If your trucking company needs extra cash, invoice factoring is just one option available to you. If you need additional funds to operate or grow your business, consider getting a business loan for trucking companies. For fuel purchases, you can also apply for a fuel credit card, which allows you to pay later, and some cards even let you build up rewards. No matter which financial route you choose, make sure to check out our reviews, comparisons, and other financial resources to help you make the best decision for your trucking business. Good luck!