According to the American Transportation Research Institute, average revenues for U.S. trucking firms were more than $284.4 million in 2017. Median revenues were just over $23 million. Much of this depends on the size and type of trucking company, but the study looked at local delivery companies, regional and inter-regional haulers, and national firms.
To succeed, you need to have money coming in to cover your expenses. Each trip your drivers take has them fueling up their trucks, vans, or big rigs. They may run into problems and need urgent repairs to get back on the road. They have to pay tolls. You have insurance premiums, permits, and licensing to pay. You have your main offices where you pay for office supplies, rent, upkeep, and utilities. You also have salaries and benefits to pay. In that same study, it was found that the cost per hour for trucking companies was almost $67 an hour.
When you’re a smaller firm, being paid as quickly as possible is critical. If you have a client that consistently pays late, it can put your business at risk. How can you get money faster for truck loads delivered?
Tips for Getting Your Money From Brokers or Shippers
Before you agree to take a new client, run a credit check. If they have a history of not paying on time or not paying at all, a credit check will tell you this. You can refuse to take the load or ask why they paid late. They may have been starting and have since remedied the issues they faced in the beginning. It could have been a simple mistake with accounting software. Use that information to determine if you want to give them a chance.
Talk to your broker. Some offer “quick pay” services that pay you an advance on the load you haul for them. This is an option that gets money to you faster, but you do lose some money in the process. You could still have to wait a week to get paid by your broker, while they wait for the payment to arrive from the company that hired them to arrange transportation services. If the payment never comes, it can lead to your broker giving you low-paying loads, which can destroy your bottom line. Before looking into a quick pay agreement, make sure you exhaust other options.
One of the most convenient ways to get paid quickly is by choosing a company for freight factoring services. Submit your invoice or bill of lading to the factoring company. You get paid some or all of that money immediately. If this sounds good, keep reading to learn what questions you should ask before taking the next step.
Partner With a Freight Factoring Specialist
Instead of looking into quick pay arrangements, partner with a freight factoring company. These specialists take the bills of lading on loads you’ve delivered and pay you a percentage of the amount you’re due then and there. It may take a little time for the funds to get transferred to your bank, but you’ll often have your money within a day or two, which is far more advantageous than waiting 30, 60, or even 90 days.
How do you find the best freight factoring company? Do some research and ask questions if they don’t make the information readily available. Here are ten questions to ask.
#1 – Do You Offer 100% Advances?
First things first, ask what type of advances are offered. Sometimes, a freight factoring company will only pay you a portion of the money you’re owed. You might have an invoice for $10,000 and find the freight factoring company will pay you 90%. It would be best if you verified that they offer 100% advances unless you’re okay with a partial payment for now.
#2 – Do You Offer Free Credit Checks?
Research a broker or shipper before you agree to haul a load for them. This does get costly if you’re working with many different companies. Save money by looking for a factoring firm that offers free credit checks. In addition to getting your money faster, you’re saving money on business expenses that you’re currently paying. That puts extra cash in your hands to help grow your trucking company.
#3 – What Are Your Factoring Rates and Fees?
All freight factoring experts charge a rate to factor invoices. Those rates vary significantly from one company to the next. Before agreeing to the lowest rate you find, make sure the company doesn’t tack on hidden fees that end up costing more in the long run.
Saint John Capital has competitive rates and flat fees. You won’t find hidden fees increasing if a broker or shipper pays late. Our rates start at 1% for fleets of 11 or more trucks and go as high as 1.95% for fleets of one or two trucks.
#4 – Do I Have to Submit Every Client’s Bill of Lading?
You have a few clients who always pay the minute you submit an invoice. You don’t want to have to factor those invoices. Ask if the company requires you to factor every invoice or if you’re allowed to pick and choose. If a company tells you you have to submit them all, keep looking. You also want to be careful about partnering with a freight factoring specialist that requires you to meet a monthly quota. If you have an off month, you shouldn’t be penalized in a manner that will hurt your bottom line.
#5 – Do You Have a Debit Card With Gas Discounts?
Find out if the freight factoring company has a MasterCard or Visa fuel card. If they do, learn more about the fuel discount. That’s another way to save a lot of money. A Saint John Capital Fuel Card helps you save up to 14 cents per gallon.
#6 – Can I Get Same Day Funding?
It’s possible to get paid the same day you pick up or drop off a load. You want to choose a freight factoring company that offers same-day payments. It may take a day or two to transfer to your bank, but that’s better than waiting weeks or months. If you have a fuel card, getting the payments directly to that card can be even better.
#7 – What Happens If My Broker or Shipper Fails to Pay You?
There are non-recourse and recourse arrangements with invoice factoring. You want to know upfront if you’re going to have to buy back the invoice if your broker or shipper fails to pay. You need to know if you’ll be charged fees for them paying late. Ideally, partner with a firm that offers non-recourse arrangements. If your client doesn’t pay, it’s not your problem.
#8 – What Other Services Do You Provide?
Find out if the freight factoring specialist provides additional services. They can be a huge perk when you’re growing your business. A line of credit is one option that may help you expand your company.
If there’s an app to find loads, use it. Instead of having drivers returning to your company with an empty truck, they could transport a load from the city they’re in back to your city. You also earn money on the return trip, which is an intelligent way to increase your revenue. That same app may help you track loads. You’ll always know where your drivers are and can keep your brokers or shippers updated if they’re asking for a delivery time.
Saint John Capital checks all of those boxes. We’re happy to help you get paid for your loads the same day you deliver them. The Saint John Visa card is one of the best ways to make this happen, and you get substantial discounts on the fuel you purchase with our card. You don’t need a personal credit score to qualify for this Visa. It’s accepted anywhere that a Visa is accepted, and there are no hidden fees. Apply online and get paid now.