How to Finance Freight Truck Repairs

Having a freight truck break down is always a challenge, but successful trucking companies and owner-operators know how to get their power units repaired so that they can get back on the road with minimal down time.

Ideally, you want to work with a mobile repair unit so that you can get the problem resolved as soon as possible. If the damage is extensive, however, the truck will need to be repaired at a service station.

Having a truck down can throw a wrench in your finances and needs to be managed so that your power unit can get back on the road quickly.

Paying for repairs can be difficult

Many small fleets and owner-operators experience problems when it comes time to pay the bill for unexpected repairs. They may simply find themselves unable to pay the bill.

And even if they do pay the repair bill, they may be left without any money to pay for other expenses, like fuel and operations.

Stopped trucks bring no revenues

Obviously, a truck that is not moving loads is not generating any revenues. This can put you in a Catch-22 where you need money (revenues) to get the truck repaired, but you can’t get revenues because the truck is broken. If you don’t have money to pay for repairs, your truck could be out of service for a long time.

There is an increasingly popular solution to this problem. If you have delivered some past loads and are waiting to get paid on those freight bills, you can finance them and get money for repairs.

Finance slow-paying freight bills

Most commercial shippers and clients do not offer quick pays for your loads. Instead, you often need to wait 30 to 60 days to get paid. This delay leaves your money tied up in slow-paying invoices. And if your truck needs repairs, you may not be able to wait for payment.

You can get funds by using freight factoring financing. This solution provides you with quick funding that can be used to pay your repair bill and cover any other business expenses.

How does it work?

The transaction is relatively simple. You can finance your slow-paying freight bills through a factoring company. There are two ways to structure a transaction:

  1. Small companies can opt to finance their freight bills with  a single transaction. In this case, the factor provides an advance of 93% to 97% of the invoice. The money is advanced as soon as your client verifies that the load has been received. The portion that was not advanced becomes the finance fee when the transaction settles.
  2. Companies with larger fleets usually prefer to finance their bill in two installments. The first installment covers 90% of the freight bill. The funds are transferred to your account as soon as the factor verifies that the load has been received. The remaining 10%, less the fee, is transferred to your account once your client pays their bill in full, on their regular terms.

Most two-installment transactions are cheaper than single-installment transactions, and fees range from 1.15% to 2.5% per 30 days. If you would like more information, we can provide you with a factoring quote.

How long does it take to get funds?

Usually, you can get invoice factoring quickly. The process can take a couple of days if you have your documents in order and if everything goes well. However, it could take as long as five to ten business days.

Be sure to ask your factor about this matter before you start the process.

How do I qualify?

Qualifying for freight bill factoring is relatively easy. The most important requirement is that your clients must be credit-worthy, since their invoices are the collateral that the factor is financing. Also, your freight bills must be free of encumbrances and your authority must be valid.

Financing your freight bills can be an ideal solution if you need money to pay for truck repairs. Many transportation companies use factoring regularly because it improves their cash flow and provides funds to pay for expenses, allowing the owner to focus on moving more loads and growing the business.

Get more information

We are a leading factoring company and can provide you with high advances at low rates. For more information, please get an instant quote or call (877) 300 3258.