The Benefits of Same-Day Payment for Independent Truckers

According to the Federal Motor Carrier Safety Administration, there were 922,854 independent (owner-operator) trucking companies at the end of 2023. Independent truckers account for 11.1% of all truck drivers. 

Being self-employed is great, but it’s also a lot of work. When you’re an independent trucker, you are probably doing everything on your own – bookkeeping, marketing, scheduling, and transporting the goods. It’s hard to balance everything, but you also have to chase clients who still owe you for the last invoice. Little feels worse than invoicing a broker or shipper and seeing a month pass with no incoming payment.

Same-day payments are everything to independent truckers. But, you’re not sure how it works or how to get started. TBS Factoring’s guide walks you through the pertinent details.

Introducing Freight Factoring

What is freight factoring and how does it work? It’s a service where a factor purchases your unpaid invoices from you for a discount. Suppose you’ve hauled several loads this month for a broker and you’re owed $20,000. You invoice that client with NET30 terms. You might not see payment for another month, and that’s a long wait when you need gas, have truck repairs and maintenance to take care of, and must pay bills on time.

Instead of handling invoices on your own, you work with a freight factoring partner. For a fee, the factor pays you for the invoices now and collects payment from your client when the payment is due. Circling back to the $20,000 you’re owed. Say you agree to a 5% factoring fee and a $3 EBT charge. The agreement is that you get 85% now and the remaining 15% when your client pays.

After those fees, you’re owed $18,997. You get 85% of it the same day you deliver the load. That means, $16,147.45 is paid to you that day. The remaining 15% or $2,849.55 is paid when your client pays the invoice. There’s no more need to wait months to get paid. You have the funds needed to keep up with your bills, fuel expenses, and payroll. 

There are two main forms of freight factoring: Non-Recourse and Recourse.

With recourse factoring, you’re responsible for repayment if your client doesn’t pay the invoice. The rates are lower, but you take on the risk of non-payment. Non-recourse arrangements differ in that the freight factoring company covers the loss if your client doesn’t pay. Rates are higher, but you gain protection if a client files bankruptcy or shuts down without notice.

How Does This Benefit You?

As an independent trucker, you’re busy on the road. Freight factoring helps out in many ways.

You return from hauling a load to its destination. While you want to rest up, you don’t have that option. You have to look for more work. You must generate invoices on your computer, send those invoices to your clients, deposit any payments that have come in, and update your bookkeeping software to account for any financial transactions that occurred since the last time you logged in.

 With a continual cash flow and no long waits to get paid, you keep up with bills. There are some business expenses you cannot ignore. Renewing your insurance, CDL, and any permits and certificates is essential. Your trucks need to be registered and inspected to meet legal requirements. Without the ability to drive your truck legally, you risk losing business and shutting down. Getting paid in a timely manner is essential.

The freight factoring company you partner with takes over invoicing, sending out those invoices, and tracking payments. You no longer have to spend hours each month doing this. Instead, upload the invoices to your bookkeeping software, and check that everything is uploaded correctly. You save a lot of time when it comes to the financial side of running your business.

A freight factoring partnership enables you to access business credit reports. Before you agree to work with a new client, you can check their payment history. You’ll know if they have a history of not paying drivers, paying late, or owe a lot of money to others. It helps you make business decisions that protect you from non-payment or late payments. 

You also enjoy fuel discounts. Every freight factoring company’s fuel discounts are different and depend on the arrangement you set, but discount fuel cards at TBS Factoring provide savings of as much as 90 cents per gallon. Every 100 gallons you get at participating truck stops or gas stations means you’ve saved as much as $90. Reinvest that savings into your business.

Tips for Qualifying for Same-Day Payments

Know the deadlines for submitting same-day payment requests. If it’s after banking hours, a weekend, or a holiday, you often must wait for the next business day for funds to be sent. Read your contract to make sure you understand any deadlines.

Make sure you complete the pre-approval process. TBS offers a Get Paid app to make this process simple. Once you’ve been pre-approved to accept a load, schedule that load and complete any required paperwork.

Once you complete the run and deliver the load, VeriFast is a one-click solution to verifying you’ve picked up and delivered the load. Submit a payment request and get paid the same day. Use the app to simplify this process and ensure all goes smoothly.

Choose the Best Factoring Service for Your Independent Trucking Company

You must find the best factoring service for your needs. Freight factoring fees are only a small part of the decision. You do need a breakdown of the fees and any potential hidden charges, but there’s so much more.

How much experience does the factor have in the trucking industry? If the company doesn’t specialize in the trucking industry, it’s not enough. You need someone with the expertise to help you manage your trucking company and add services that make it easy to manage your cash flow and ensure money is there when you need it

You need a company that will help you grow, if you want to, and provide services that enable that growth. Truck drivers complete a lot of compliance paperwork, and TBS Factoring’s guides help you navigate those challenges. We also partner with insurance companies to help you find the lowest possible insurance rate.

Other services that are important for independent truckers are unlimited free business credit checks and fuel discounts. TBS helps with all of these and has decades of experience helping trucking companies manage their invoicing and grow their businesses.

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