TAFS is a factoring company that provides owner-operators accounts receivable financing, a.k.a. factoring. Factoring has become extremely common in the trucking business and is when your company’s accounts receivable are converted into cash by selling the freight bill of lading or outstanding invoices to us, the factor. Rather than waiting for your customers (the shipper or freight brokers) to remit payments based on 30, 60, or 90-day terms, we quickly advance a percentage of the invoice to your business. This steady cash flow is vital for small businesses and allows working capital to fund your critical expenses such as payroll, fuel, insurance, and maintenance. TAFS is also able to offer same day funding and even get you your money in as little as one hour using our factoring program.
Those in the trucking industry have more than likely at least heard of the term “freight factoring” or “truck factoring” by now. 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 drivers and business owners still do not understand precisely what it is, or how it all works. This is especially true to those who are new to the world of trucking in general, let alone specifically that of trucking factoring.
Previously, many 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. Traditional banks, 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 in between periods.
John Doe is a victim of the upfront teaser rate. He signed up with ABC Factoring after they promised him a 1.5% factoring rate. It sounded too good to be true and John Doe did not want to pass up the supposed opportunity. But things took a turn for the worse after John Doe sent ABC Factoring the first invoice.
John’s invoice was for $1,000. With a 1.5% rate, he expected the factoring company to pay him $985. But John didn’t plan on the $25 rush fee, the $5 invoice submission fee, and the $15 invoice processing fee. The 1.5% rate quickly jumped to 6%. Do not forget the $300 setup fee. Now John Doe is only receiving $640 for his $1,000. And it doesn’t stop there. John also pays a $100 monthly membership fee just to be able to send invoices to ABC Factoring. Even if John submits 10 invoices a month, he’s still paying an extra $10 per invoice. John’s rate is now a MINIMUM 7% per invoice just to factor with ABC Factoring. PLUS if John’s customer doesn’t pay ABC Factoring for an invoice within 30 days, John will be charged an aging fee. John is constantly hustling to stay afloat all because he only looked at the 1.5% teaser rate, and not the additional fees.