You or your drivers are on the roads for hours every day. You sit and wait at the loading dock because multiple trucks are there waiting for their turn. Once your load is unloaded, you move on to the next job. If you’re not an owner-operator, you’re continually looking for more work, checking in with your drivers, and making sure your current clients are happy. It never seems to end.
When that’s your daily routine, the last thing you should have to do is also keep checking to see when a broker or shipper is going to pay you. Hours are wasted tracking down unpaid invoices, generating new ones, and trying to get enough cash to pay your business expenses and drivers’ wages. The eight biggest expenses trucking company owners face are:
- Driver wages and benefits
- Fuel
- Truck/Trailer loans or leases
- Maintenance and repairs
- Insurance premiums
- Licenses and permits
- Tires
- Tolls
Tired of waiting 30,60, or even 90 days to get paid? We get it. That’s why Saint John Capital has been a leader in same-day payments for professionals in the trucking industry. Have you heard about the benefits of freight factoring? Our guide walks you through it.
Typical Payment Cycles Lead to Cash Flow Issues
Within the trucking industry, the payment terms listed on invoices range anywhere from Net 30 to Net 120. Obviously, you don’t want to wait all 120 days. That’s a lot to ask, but it’s often needed for specialized freight and work for government agencies like FEMA.
When you’re dealing with typical payment cycles, it gets hard to keep up with operational costs. Your drivers need their wages and benefits paid on time. You also need cash for fuel, truck and trailer maintenance, rent, truck and trailer loans, etc. If you cannot keep up with bills because payments are taking too long to arrive, it drives up costs even more.
Late payments drive up interest rates. You face costly late payment fees. And, it impacts your credit score which makes loans harder to get, and also increases the amount you pay on current credit cards. There’s something else to consider, dings on your business credit report make you less appealing to brokers and shippers. Even though it is their late payments that put you in this position, you may become less appealing to new clients.
Freight Factoring Provides Immediate Cash Advances
What do you know about freight factoring? It’s a financial service where you sell your unpaid invoices to a factor for a lower rate. You get paid right away, which improves your cash flow and makes it easier to manage your business’s obligations.
Your drivers deliver a load and get the approved bill of lading. You sell that to the factoring company for a discounted rate, usually no more than 5%, and the company pays you the amount due minus that percentage. You have the cash you need, and they chase down your client for payment.
Six Benefits of Freight Factoring for Trucking Companies
Freight factoring offers six clear benefits. You’ll experience all six when you partner with a factor like Saint John Capital.
Business Credit Checks
Business credit checks allow you to thoroughly check a new broker or shipper before you agree to work with them. This helps lower the risk of being scammed by someone who has no intention of paying you. While many factoring companies limit how many credit checks you can do per month, there are no limits with Saint John Capital.
Business Growth
You’re getting paid on time, which means no late fees, lower interest rates, and a positive credit score. This makes it much easier to invest money from newer clients and additional workloads into growing your business. Plus, you can put the money you save on gas back into your business. More on these gas discounts in a minute.
Because Saint John Capital is handling the invoice and chasing payments, you also have more time to spend on important tasks like finding new clients, keeping up with licenses and certifications, and getting to know your employees without feeling rushed.
Debt Protection
When you have a steady cash flow, you keep up with bills. Nothing is overdue or paid late, which impacts your credit score. That protects you from higher interest rates and loans, which protects you from sinking deeper into debt.
Fuel Discounts
Sign up with a factoring company and get their business debit card. When you do, you qualify for fuel discounts. Every time a truck needs fuel, you’ll save money on that fill-up. Over time, you’ll save hundreds of dollars.
Same-Day Payments
As long as you submit your bills of lading by the deadline, it’s easy to get paid the same day you deliver a load. Imagine never having to wait weeks or months to get the money you’re owed. Complete a delivery, upload your bill of lading by the noon EST deadline, and get paid that afternoon.
Steady Cash Flow
Because you have lower interest rates, can keep up with bills, and get paid each time you submit a bill of lading, you have a steady cash flow. That makes it less stressful to run and manage your business.
How Do You Get Started?
When you’re talking to different freight factoring firms, look at these criteria:
- Are there quotas to meet each month?
- Do they offer recourse and non-recourse arrangements?
- Do you have to use them for every client you have?
- How long have they been in the trucking industry?
- Is their customer service team easy to reach? What are their hours?
- What are their rates and fees?
It doesn’t hurt to enter into a freight factoring arrangement cautiously. For that reason, we never require trucking companies to factor every invoice with us. Pick and choose which clients you want us to manage, and we’ll take over. If you have clients you love to work with, keep doing that on your own.
Saint John Capital offers competitive rates, and we never pressure you into meeting quotas if you don’t want to deal with them. It’s our goal to help all trucking companies grow at the pace they’re comfortable with. If that means staying the same size, great. If you want to grow, we’re here to help you.
Talk to Saint John Capital about your cash flow issues. We’re happy to discuss the different rates, the pros and cons to non-recourse and recourse arrangements, and the speed at which you could get paid. Reach our team of freight factoring experts via phone or email.
