Factoring for Owner-Operators

Most truckers become owner-operators because they want more money, and they want the freedom of running their own business. But, above all, they want the opportunity to grow and make a successful trucking company.

Unfortunately, most owner-operators encounter problems because they don’t have enough money to run the business. They are caught off guard when they don’t have the money to cover an important expense. Before long, they are in serious trouble.

Slow payments and ongoing expenses

Unless they offer quick-pays, most shippers and brokers pay their freight bills in 30 to 60 days. That timeline means that you, the owner-operator, must pay the expenses of running the business while you wait for payment.

Running a trucking company is expensive. You have to pay for a number of things, including:

  • Your salary
  • Equipment
  • Fuel (learn how to manage this cost)
  • Emergency repairs
  • Insurance costs
  • Maintenance

These costs can add up quickly. And missing any of these payments can stop your company in its tracks. For many new and growing owner-operators, waiting up to eight weeks to get paid is simply not an option.

Fix your cash flow with factoring

You can improve your cash flow and fix this problem using freight bill factoring. This solution is an owner-operator financing alternative that helps truckers who can’t afford to wait up to 60 days to get paid.

Freight bill factoring finances your freight bills and provides you with immediate funds to pay expenses and take new loads.

Note: Factoring is only available to owner operators that operate under their own authority.

How does a transaction work?

Most owner-operators finance their freight bills using a single payment. Basically, the factoring company pays them an advance ranging from 95% to 98% of the freight bill. The 2% to 5% that is not advanced becomes the fee.

The transaction settles when the shipper pays in full. This model is fairly simple and provides a high advance.

Some owner-operators and growing fleets prefer to use a two-payment transaction instead. These transactions have lower advances and slightly lower fees. Often, the initial advance is for 90%. The remaining 10%, less the fee, is rebated as a second payment when the shipper pays. Keep in mind these numbers vary.

Fuel advances are key

One key feature that most owner-operator factoring programs have is fuel advances. These plans provide you with money to pay for fuel as soon as you pick up a load. Fuel advances have a number of benefits that can help small fleets during their initial growth, when money is tight.

Fuel cards help manage costs

Another key feature that owner-operator factoring programs have is fuel cards. Fuel cards allow you to better manage your costs and expenses. Cards are integrated to the factoring program and can receive advances directly. In many cases, they can also provide you with substantial fuel savings.

It’s easy to get

One advantage of owner-operator factoring plans is that they are easy to qualify for. Often, you only need to fill out an application and submit a couple of documents. Usually you can get your first invoices funded quickly, in a day or two.

Get more information

We are a leading freight factoring company and can provide owner-operators with high advances at low rates. For more information, get a factoring quote or call us toll-free at (877) 300 3258.