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Does Bad Credit Matter For Freight Factoring?

The pandemic hit many trucking companies pretty hard. You’re among them. You managed to survive the pandemic’s slowdown, but it impacted your credit. You need to build your trucking business to ensure you have steady revenue, but bad credit keeps you from qualifying for business loans. How about freight factoring? Does bad credit matter when it comes to freight factoring?

Bad Credit Doesn’t Always Matter

The good news is that freight factoring doesn’t require a credit score on your end. You’re doing the work as promised, and once you have the signed bill of lading in hand, you can submit that to get paid instantly. That’s the benefit of invoice factoring. You get paid now rather than weeks from now.

It’s your brokers’ or shippers’ credit scores that matter with invoice factoring. When you sign up, you’ll provide a list of brokers or shippers you work for. Saint John Capital runs free credit checks to decide if you can factor those invoices with use. As long as we approve your broker or shipper, you’re on your way to rapid payments.

How Freight Factoring Works

How does freight or truck invoice factoring work? It’s easy. Install a free app after you register with Saint John Capital. Each time you have a signed bill of lading, you can decide if you want to factor that invoice with us. If you do, take a picture of the bill of lading and submit it to us through the app.

We’ll process it and send you the money you’re owed. If you have the Saint John Capital Visa or have registered your bank account information with us, submit the bill of lading by noon EST to get paid the same day. If you miss that deadline, you’ll never have to wait long. While it may take weeks to receive payment from your clients, you’ll have payment in your bank account within a matter of days.

What’s the catch? That’s a popular question. There is no catch with invoice factoring. You do pay a small fee that’s taken from the money you’re owed by your clients, but we have the lowest fees in the industry, starting at 1% and going to 1.95% if you only have one or two trucks. For the ability to get paid instantly, truck drivers and owners agree it’s advantageous to pay this small fee and have the cash that’s needed for repairs, maintenance, fuel, utilities, etc. now rather than weeks from now.

Some companies only offer a percentage of the money you’re owed. You’re offered 90% of 95% of the money right now and have to wait for the balance once your client pays the freight factoring company. Saint John Capital provides 100% advances if that’s better for you.

Here’s why so many trucking companies prefer to factor their invoices. Suppose you have a truck that needs repairs. If you wait until you have cash from your brokers or shippers, you’re down a truck for weeks or even months. You lose money because you lose opportunities to haul loads. You could put it on a credit card, but if you’re unable to pay at the end of the month, you’re now paying interest. Often, the interest you pay on a credit card is significantly higher than our 1% to 1.95% factoring rates.

Steps to Take to Improve Your Credit Rating

Saint John Capital also offers an SJC Line of Credit you can use to grow your business. Improving your credit rating is the best way to get a large line of credit that you can use to grow your trucking company. Use your line of credit to purchase new rigs or cover unexpected expenses. The better your credit rating, the lower your interest rate. When you don’t have the best credit rating, what are the best ways to improve it?

Start by learning what your business credit score is. You want to look at your business’s credit report and make sure the information within it is accurate.

If there is inaccurate information, talk to Dun & Bradstreet, Equifax, and Experian to get the information corrected. Be prepared to show proof that you paid off your debt. If you believe there are errors, the company/lender has a month to verify the information they have as correct. If they cannot prove you owe that money, they must remove the incorrect report.

Do you pay a vendor that’s not on your credit report? Find out why it’s not there. If you pay on time each month, it could improve your score if it’s added. So, it’s always worth getting that information added.

Pay your business bills on time. If you often struggle to come up with the money at the end of the month, make smaller weekly payments to cover the amount due over time. If you find you’re in over your head with a creditor, talk to them. Explain the situation. They may be willing to lower your interest rate or take smaller payments to ensure you’re able to keep paying them. Most creditors would rather work with you than end up dealing with collections.

Once you’ve paid off an account, don’t close it. That actually harms your business credit score. Leave it open and check it each month to make sure someone hasn’t charged money on that account you’re not touching.

Credit utilization is a ratio of the credit you’ve been extended vs. the amount you’ve used up. Keep this low to have a better score. It’s not surprising if it’s higher than it needs to be. That happens to many companies. Focus on one account, pay it off until it’s at 30%, and move to the next. Every step you take to get your credit utilization lowered helps.

On the opposite end, you may not have enough business accounts to have much of a credit history. Sign up for an account or two and start making small charges. Pay what you owe and repeat that process. That helps build a reputation as being trustworthy. The key is to pay what you owe. That proves responsibility and also keeps the credit utilization score low.

As your score improves, you’ll find yourself qualifying for a line of credit. That also helps improve your score, as you’ll have a different type of credit on your report. Pay it back to keep growing your credit score.

Get Started With Freight Factoring

There are other benefits you gain by registering an account with Saint John Capital. We generate invoices for you once we’ve received your bills of lading. You won’t need to spend time creating invoices anymore. The invoices we create are uploaded to the app for you to easily add to your accounting software.

Our app also has a load board with millions of loads. Instead of having your drivers traveling with empty trailers, they’ll have full trailers during their trip there and back. You increase revenues. Our Find Loads board makes it easy to search by area and price, you can pick and choose loads that fit your needs and preferred job rates.

Do you have additional questions? Saint John Capital is happy to talk to you more about freight factoring, no matter what your credit score is. Call or email to learn more.

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