How to Finance a New Trucking Company

Few businesses are as cash flow-intensive as a trucking company. Small and growing companies can easily be overwhelmed by the endless list of ongoing expenses: fuel, truck repairs, rentals, and salaries. And then there are shippers and commercial clients who don’t offer quick-pays and, instead, pay their freight bills in up to 60 days.

Basically you have immediate expenses and slow revenues. You can experience working capital problems simply because of how your revenues and expenses are timed.

How can you fix this problem?

Because this problem is one of timing, the solution is to accelerate your customer payments. Unfortunately, convincing clients to pay quickly is difficult.

A more realistic alternative is to finance your freight bills using freight bill factoring. This solution provides many of the benefits of quick payments without requiring your customers to pay sooner. It also improves your cash flow and provides a stable financial platform that you can use to grow your trucking company.

You can finance as many invoices as you want, when you want to – giving you unparalleled flexibility.

How does freight bill factoring work?

There are two ways to structure a freight financing transaction. Most owner-operators and small trucking companies use single-installment funding. In this case, the finance company advances between 95% and 97% of the invoice.

The portion not advanced represents the financing fee, which gets settled once your client pays. This model provides the most immediate cash flow but costs more than two-installment transactions.

Most mid-sized and larger trucking companies use a two-installment model in which the finance company advances 90% of an invoice as a first installment. Once the customer pays, you get the remaining 10% (less the fee) as a second installment.

Help with fuel expenses

One of the greatest expenses for any size trucking company is the cost of fuel. Our program can offer you a fuel advance, which provides you with funds as soon as you pick up the load. Fuel advances have many benefits and can help owner-operators who are just getting started.

Our program also works with fuel cards. Often, we can help you get discounts on the cost of your fuel.

Can owner-operators and small fleets qualify?

Most owner-operators and mid-sized trucking companies can meet these qualification requirements:

  1. Your company must do business with reputable commercial clients or freight brokers
  2. Your company must be free of tax problems
  3. Your invoices must not be encumbered by liens.

Most freight factoring companies are comfortable working with new businesses, so you should be able to qualify even if you are just starting as an owner-operator. Best of all, you can get a financing agreement in place within a few days.

A stepping-stone to bank financing

One important – but often overlooked – benefit of this type of financing is that it can be used as a stepping-stone to cheaper bank financing. Smart trucking companies can leverage their factoring relationship to grow the business for several years, while improving their financial statements. If they handle the process correctly, they may eventually meet bank financing criteria and migrate to a line of credit.

Get a quote

We are a leading factoring company and can provide you with a competitive quote. We offer high advances and low rates. To get a quote, please fill out this form or call us toll-free at (877) 300 3258.