Financing for Trucking Dispatchers

Transportation dispatchers play a critical role for owner-operators who are looking to grow their businesses. They help carriers with a number of critical tasks including finding loads, negotiating rates, keeping trucks on schedule, taking care of paperwork, and so on.

Unlike freight brokerages that represent themselves, dispatchers represent owner-operators. This difference is important. Dispatchers are paid by the carrier, either on a flat-fee arrangement or as a percentage of the total invoice to the shipper.

However, dispatchers aren’t always paid quickly. Slow payments happen for various reasons. The most common reason is that the owner-operator has a cash flow problem – leaving them unable to pay their dispatcher quickly.

Most cash flow problems occur because shippers and freight brokers pay slowly. Carriers and freight brokers can solve this problem using factoring. But what about dispatchers?

Carriers and freight brokers use factoring

Most carriers and freight brokers solve this cash flow problem using freight factoring. Factoring provides a simple solution to this problem. The carrier or broker submits their invoices to the factoring company, who then finances the invoices. Instead of waiting for the shipper to pay, the factor pays the carrier (or broker). The factor gets paid back once the shipper pays.

Most factors fund small carriers with single-installment transactions, where the factor advances 95% to 98.5% of the invoice. Factoring is a great solution for carriers and freight brokers because it helps improve their cash flow. Unfortunately, dispatch companies usually don’t qualify for factoring (read on, there is a solution).

Why can’t dispatchers be funded directly?

In an ideal world, a trucking dispatch company should be able to use factoring to finance their business directly. Unfortunately, there are a couple of reasons why this is not possible.

The first issue is creditworthiness. Factoring works only for transactions where the company paying the invoice has a good commercial credit score.  Unfortunately, most small carriers – typical clients of a dispatcher – do not have a credit score (or their credit score is negligible). Consequently, most of those invoices cannot be financed.

The second issue is that most freight dispatch businesses usually send a large number of small invoices to their multiple carrier clients. Many factoring companies are not well positioned to provide factoring in these scenarios because the process becomes too labor-intensive. However, there is a solution.

The solution – factoring with dispatcher quick-pay

As a dispatcher, your company cannot be factored. However, your carriers can be factored. We have a solution that adds a dispatcher quick-pay feature to the traditional factoring plan. Under this plan, when your carrier client submits an invoice for factoring, we take your payment out of the advance and quick-pay it to you.

This is how dispatcher quick-pay works:

  1. Invoices are submitted to the factoring company for payment
  2. The factoring company verifies invoices and paperwork
  3. The factor prepares the advance and splits it into two payments
  4. The carrier and dispatcher both get paid the same day

How to qualify for this plan

As mentioned before, this plan works by having your carriers use factoring and then having the carrier request a quick-pay to the dispatcher out of the advance. Therefore, your carriers must apply to this program and request the quick payment for you. Our plans can also provide fuel advances to carriers as an additional benefit. To qualify, the carrier must:

  1. Be properly organized (incorporated or LLC)
  2. Be free of liens
  3. Have owners who can pass a background check
  4. Have an authority | MC number (unless you operate intrastate only)
  5. Have a DOT number
  6. Have cargo insurance

Looking for dispatcher financing?

We can help finance dispatchers through our factoring program. For more information and a quote, fill out this form or call (877) 300 3258 (indicate that you are a dispatcher).