Those in the trucking industry have more than likely at least heard of the term “freight factoring” or “truck factoring” by now. Maybe even “invoice factoring,” as that is what we are really dealing with, the purchasing of unpaid invoices to get you paid for the invoice amount. It tends to get thrown around quite a bit these days and has gained a name for itself in the industry over the past several years. However, even those who have heard of the term factoring, many truck drivers and business owners still do not understand precisely what it is or how it all works. This is especially true for those who are new to the world of trucking in general, let alone specifically that of trucking factoring.
Previously, truckers would grab a load from a load board or their dispatching service, then were forced to float debts and rely heavily on traditional banks for loans to cover their business expenses until they received payment for the loads they ran. This is because you may not get paid for that invoice value until 30, 60, or even 90 days out. Traditional banks try to help freight companies, however, are not solely focused on the trucking industry, therefore, rarely have plans that truly benefit the needs of truckers. Worse than this, many would even turn to credit cards to cover them in these uncertain times.
There are many different types of factoring programs from various providers, and choosing the correct one for your business is an important decision.