English 
Spanish 
Consistent cash flow is crucial for owner-operators and small trucking businesses because it’s a lifeline. Keeping cash coming in makes their business profitable and allows them to reinvest it where it’s needed. One major challenge for truckers with cash flow is that, most of the time, there is a 30- to 60-day payment cycle. That said, there are two standard solutions for faster payment: freight factoring and quick pay. Both options can benefit truckers, but which option saves owner-operators the most money? That’s what we’ll be discussing in this article as we break down the differences between freight factoring and quick pay options to determine what’s best for you and which one will save you more money in the long run.
What is Quick Pay?
Brokers offer quick payment, allowing truckers to be paid within 1 to 3 days, typically, instead of the usual 30- to 60-day wait. The process starts with the trucker delivering the load as usual and submitting the paperwork to the broker. Following that, the broker will process it and then deposit the funds into the trucker’s account. When it comes to costs, there is typically a 2% to 5% fee (sometimes higher) when working with the broker, and these fees aren’t negotiable. If you’re a trucker working with multiple brokers, this fee can vary by broker, as they set it.
The benefits of using a quick pay option include faster turnaround than the typical waiting period, no long-term commitments, and a simple process. However, the cons of quick pay options include higher fees, a wider range of brokers, limited support, and inconsistent cash flow when working with multiple brokers. Another thing to keep in mind is that pay is not same-day; it is processed 1-3 days after submitting the paperwork, and funds are initiated.
What is Freight Factoring?
Freight factoring, offered by TBS Factoring, is a financial service in which a factoring company purchases your invoice and typically pays you the same day or within 24 hours. It starts with the trucker delivering the load as usual, uploading paperwork for the load and the invoice. The factoring company advances funds and collects payment from the broker or shipper. Freight factoring rates range from 1.5% to 3.5%, depending on volume, creditworthiness, and payment speed. Factoring companies also typically offer additional benefits with their services, such as compliance assistance, fuel discounts or cards, load monitoring, and even credit checks on brokers.
Freight factoring offers lower rates than quick-pay options and works with all brokers, resulting in consistent cash flow for drivers and owner-operators. The added business support and extras also help to alleviate some of the back-end admin work that comes with trucking businesses. Some cons of working with a freight factoring company include that some carriers may not want a contract or long-term service, and that it requires working with a third party, which some clients may not prefer.
Understanding the Long-Term Financial Impacts
There are multiple aspects of the long-term financial impact of both quick pay and freight factoring, but understanding them is essential to choosing an option that benefits your business and saves you money. There are three main aspects of the long-term financial impacts: brokers, business growth, and risk management, all of which affect the cost-effectiveness of these options.
Working with Brokers
Brokers are an essential part of quick-pay and freight factoring solutions, but there are differences in how they are used and what they mean for your business. For quick pay options, this solution works with different brokers, which can make it challenging to understand fees and payout times, as they vary by broker. This can lead to cash flow inconsistencies and uncertainty about which broker is responsible for that load. Factoring centralizes all invoices and provides a more consistent cash flow stream by eliminating multiple brokers with different fees and payout times.
Business Growth Considerations
As a trucker, it’s essential to look at business growth as a whole and how any investment or option you choose will impact business growth. For quick pay options, there aren’t any additional benefits to working with them, such as fuel cards, support, or other additions that freight factoring might offer. Additionally, consistent cash flow is vital for owner-operators to maintain, fuel, and invest in additional trucks. Freight factoring provides a more structured, consistent cash flow for truckers, supporting their long-term business growth and making financial planning much easier than with a quick-pay option.
Risk Management
For risk management, credit checks on brokers are crucial to ensure that all partners involved in the payouts are reliable to avoid unpaid invoices. Quick pay options don’t perform credit checks on brokers or provide credit protection if something goes wrong. However, freight factoring, such as TBS Factoring, runs credit checks on brokers, reducing the risk of unpaid invoices and protecting your payout and business.
How TBS Factoring Helps Truckers Save Money
At TBS Factoring, we offer a variety of services with complete transparency to our truckers, helping them understand what we offer and how it can benefit them. We’re here to be a partner and support your business from top to bottom when it comes to invoicing, cash flow, admin tasks, and additional support. Here’s a deeper look into what we offer:
Transparent Rates
We are upfront about our rates and offer competitive prices you won’t find anywhere else, especially when you’re comparing them to pay rates quickly. We don’t have any hidden fees you don’t know about, and we genuinely do our best to support your business financially by being an asset without draining your funds.
Same Day Pay
Quick pay solutions might offer an advanced pay option, but they don’t provide same-day pay. At TBS Factoring, we offer same-day payouts, so your funds are delivered promptly upon receipt of the invoice, ensuring consistent cash flow to support your business long-term.
Additional Benefits and Perks
We aren’t just a freight factoring company; we are an asset to your business, offering more than just instant payouts. We offer a variety of additional services and perks when working with us, including compliance support, fuel cards, credit checks, a user-friendly app, convenience, and decades of industry experience from our team.
Overall, our team is here to provide you with benefits throughout your trucking journey by stabilizing cash flow, offering additional support, taking on administrative tasks, and being an asset to your business as a whole. Freight factoring is a much more cost-effective solution for truckers than quick-pay options, especially given the additional benefits. Invest with us at TBS Factoring to learn what we offer and how we can help you stabilize your finances and grow your trucking company. Contact us today!
