Several concerning facts came out with the 2025 release of the American Transportation Research Institute’s “An Analysis of the Operational Costs of Trucking.” Driver benefit costs increased by almost 5%. Driver wages are up by almost 2.5%. Truck and trailer payment costs rose by more than 8%.
Trucking company owners experience difficulties as operating costs rise and empty miles increase to almost 17%. It’s resulting in strategies like reducing office staff and other non-driver employees. You don’t want to also lose your drivers as they’re vital to your company’s revenues.
When you’re competing against trucking companies who offer better benefits and incentives, it’s hard to retain your best drivers. Freight factoring is key to increasing loyalty and retaining your company’s talent.
Problems Occur When Your Clients Don’t Pay Quickly
DSO (Day Sales Outstanding) is a measurement of the average time it takes for a company to get paid. The higher the number, the harder it can be to pay your own bills on time. This is a problem when you have drivers and other critical staff to pay, trucks to maintain, and fuel to buy.
In the trucking industry, the Association for Financial Professionals reports that the DSO for the transportation industry is 41. Payments are taking more than a month to arrive in many cases. That creates additional problems.
- Delayed Payroll: Your drivers aren’t paid on time, so they’re not going to want to stay. Plus, you face fines for unpaid wages. In Illinois, employers who violate the Wage Payment and Collection Act face damages of 5% plus up to $1,000 in administrative fees.
- Failure to Stay Competitive: If you lack a strong cashflow and cash reserve, you won’t be able to offer bonuses and incentives that attract and retain the best truck drivers.
- Loss of Benefits: You don’t have the money to pay for this month’s health insurance. That’s an essential employee benefit, and you risk losing all employees if they discover their health insurance lapsed.
- Neglected Truck Maintenance: Safe trucks are important. If you cannot afford to have trucks and trailers properly inspected, repaired, and maintained, you put your drivers’ and the public’s lives at risk.
Losing your employees to the competition is devastating. You lose money as you advertise, interview, onboard, and train new drivers. Without a knowledgeable team, you risk losing clients as well as your best drivers.
What is Freight Factoring and How Does it Work?
One way to end the problem with slow payments is by teaming up with a freight factoring company that has decades of experience in trucking. If you are unfamiliar with freight factoring, it’s a financial service where you sell your invoices to a company that pays you immediately.
It works like this:
- Your driver delivers a load and gets the finalized bill of loading.
- You sell that bill of loading to a freight factoring specialist at a discount.
- The factor pays you immediately the amount due minus any reserve and the freight factoring fee.
- You have the money you need to pay bills and wages on time.
- The freight factoring company takes over the invoicing process.
At its core, freight factoring is a financial service where a trucking company sells its unpaid invoices (accounts receivable) to a factoring company at a small discount. Instead of waiting 30, 60, or even 90 days for a customer to pay, you get most of the money within 24 hours. The factoring company then takes on the responsibility of collecting the payment from your customer.
There are nuances to a freight factoring arrangement that impact the fee you pay and the upfront payment you receive.
If you have a large fleet, you’ll pay less than an owner-operator trucking company.
If you want to be paid when you pick up the load, you get 50% upfront, and the balance is paid when your client pays.
If you want a lower fee, a recourse arrangement has a lower freight factoring fee, but you are responsible for repayment if your client fails to pay. Non-recourse arrangements have higher fees, but you’re protected from repayment in certain situations.
Create a Strong Incentive Program Through Freight Factoring
Freight factoring makes it possible to avoid late fees from your bank, credit card company, and other creditors. Use those savings to provide incentives and bonuses to your drivers. A strong cash flow makes it easy to:
- Give performance or safety bonuses
- Maintain and provide top-of-the-line trucks and trailers
- Offer new driver referral incentives
- Pay on time, every time
- Provide wellness incentives like gym memberships
- Qualify for fuel discounts
Consider Your Competition’s Current Incentives and Bonuses
We’ve compiled some of the current incentives and bonuses offered by today’s top transportation companies. Here are some of the rewards that draw drivers to their employer’s competitors.
- Bring a Pet: Equipping trucks with pet harnesses or other pet-friendly equipment allows drivers to bring a pet with them on long-haul routes.
- Career Advancement: The company pays for educational and training programs that help them advance their career.
- Driver Socials: Social events like luncheons or dinners for drivers of national trucking companies make it easier to make friends and socialize when on the road.
- Faster Deliveries: Drivers get 1.5x more added to their pay if they complete deliveries faster than the computer estimate.
- Flexible Schedule: Drivers can set their own schedule, allowing them more time to be with kids during the summer or in the afternoon when buses bring them back home.
- Gym Memberships: Because drivers spend a lot of time sitting down, memberships to chain gyms are often appreciated.
- New Equipment: Drivers get newer trucks equipped with more safety features or luxuries like small kitchen appliances.
- Referral Incentives: Drivers receive up to $15,000 per year for referring others to the company.
- Retailer Discounts: Discount programs with retailers like tire stores, restaurants, and grocery stores appeal to many drivers.
- Safe Driving: Drivers get bonuses for driving a certain number of miles without having an accident.
- Sign-On Bonus: Drivers stay with the company for the specified period and get a bonus.
- Sleeper Cabs: Long-haul drivers appreciate having a sleeper cab, and enough room to bring a spouse or partner with them is also appealing to many truckers.
- Wait Time Pay: Drivers get paid extra if they’re stuck in traffic due to accidents, weather, or loading dock delays.
- Years of Service: Drivers get a financial reward for being with the company for X number of years.
Protect Your Company by Choosing a Freight Factoring Partner
With the ideal freight factoring partner, you have a steady cash flow. That’s the most important step in offering incentives that keep your drivers from moving on.
Saint John Capital offers low rates and additional benefits like fuel discounts and a handy app, making it easy to submit payment requests and bills of lading. Sign up for free and discover all of the benefits you gain by using our freight factoring services.
