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Freight Factoring and Government Contracts: Navigating Bureaucratic Processes

Trucking service providers often sign up to haul FEMA loads due to the higher pay rates. Before you enter into a government contract, make very sure you read the rules. FEMA’s Tender of Service Program is managed by a third-party payment system, and one of the rules in the 2023 STOS is that you may not use a factoring company. 

When you’re trying to get paid quickly, which is a key benefit of freight factoring, you also need to make sure you’re navigating bureaucratic processes correctly. If you can’t factor your invoices, you need to make sure you’re working with a company that allows you to pick and choose. If you breach the terms of your government contract, you could end up being blacklisted from future high-paying jobs for the government.

Explore the Different Types of Government Contracts for Trucking Companies

We’ve already mentioned that FEMA is one of the highest-paying options for trucking companies looking to haul government loads. Take a closer look at all of the options and what the work entails.

Department of Defense (DOD)

Sometimes, military agencies need trucks capable of handling the transportation of equipment and other military items. Trucking companies can land these contracts that are typically worth millions, but it can take upwards of two years to land your first DOD contract. When you apply, you’ll need to complete these four parts of the application process.

  • Certify that you’ve completed any preliminary requirements.
  • Provide your FMCSA information, Motor Carrier number, company name, address, and contact information.
  • Read and sign the Service Contract Act.
  • Provide required documentation.

Federal Emergency Management Agency (FEMA)

FEMA is one of the more recognizable government agencies that hire outside trucking companies. When there is a storm or natural disaster, FEMA rushes to that area to determine what the people need. After a massive flood, truckers are needed to haul supplies like water bottles and non-perishable foods. They may haul trailers where people can live until their home is repaired or new housing is secured.

  • Read over the FEMA Standard Tender of Service, Freight Transportation Handbook, and Uniform Rules Tariff. 
  • Complete the TPS Registration Form
  • Prepare and submit the required compliance documentation like proof of insurance and CDL licenses.

General Services Administration (GSA)

GSA-contracted trucking companies provide transportation and logistics for many government agencies. It might be work driving freight or packages or local courier deliveries. It can involve hazardous goods, so proper certification for hazardous waste is important. 

  • Complete the GSA How to Become a Contractor online program
  • Read the contract to ensure you’re okay with the terms and conditions.
  • Register in the System for Award Management and eOffer.
  • Collect any required paperwork or forms and submit them.
  • Submit your application and wait for the approval letter.

Transportation Protective Services (TPS)

Like DOD contracts, TPS contracts involve the transportation of military supplies, cargo, and equipment for agencies like the CSS, NSA, and SDDC. It can include HAZMAT shipments, which require special certifications and training. Security clearance is also required. The application process is similar to the one you go through with the DOD.

With any government contract, you have to apply to be considered first. This process can take months, so you need to be patient. You also need to make sure you’re doing everything needed to qualify, and that often includes completing the training and registration process to get HAZMAT certification. 

Don’t enter into a contract without understanding what you’re signing. You need a lawyer to go over contracts and ensure you can meet and abide by the rules. If there is any doubt you have the experience, certifications, or licensing to complete a part of the job, it’s better to focus on acquiring that first.

Freight Factoring Provides Several Valuable Benefits

If you can factor government contracts, there are a number of benefits that you cannot ignore. The first is that you’ll have a steady flow of working capital. You’re not waiting months to get paid. You have money coming in regularly to ensure your drivers get paid, fuel tanks are full, and insurance and certifications are current. You keep bills paid, and that’s important when it comes to maintaining a thriving trucking company.

You no longer have to worry about how you’re going to pay your rent/building loan, truck loans, insurance, utilities, and business credit cards. With a strong cash flow, bills are paid on time, you don’t fall victim to high late fees or penalties, and you avoid excess stress that can impact your mental and physical health.

At some point, your business may need to take on a business line of credit or SBA loan for growth. When you have paid your bills on time and have a consistent cash flow, your credit score is higher. That helps you get loans with the lowest possible interest rates and advantageous terms.

Saint John Can Help You Make Smart Business Decisions

You also gain many helpful services, too. With freight factoring agreements with Saint John Capital, you enjoy fuel discounts, load-finding boards, and a convenient app that makes it easy to get paid and upload the invoices straight to your accounting software. Plus, you’ll qualify for free business credit checks, so you can research potential clients before you agree to haul a load for them.

Saint John Capital has decades of experience in the trucking industry. We can go over contracts with you and help you determine if a government contract allows you to factor those bills of lading or not. If you can’t, we have other services that can help you stay afloat until you get paid

A business line of credit is one option. Borrow only what you need to keep bills and employees paid on time. When you get paid, pay off the line of credit all at once. You’ve avoided late fees and complied with the government contract you signed.

There’s one more thing to consider when you sign contracts with government agencies. The bureaucratic process may seem exhausting, but it’s worth it for more than the extra government work. As you grow your company, government contracts make you look good to other clients. 

You’ve gone through the most stringent of application processes and background checks. You passed and that makes you extremely marketable to other clients because they see someone the military or another government agency believes is a great company and chooses you for their trucking work.

Just remember that not every government contract allows factoring. Carefully read your government contracts to determine if you can factor your invoices or not. If you can, you’ll get paid fast. If not, Saint John Capital doesn’t require you to factor all of your invoices with us. You’re welcome to pick and choose the work you’re paid for ASAP and the work you’ll take care of on your own.

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