Credit cards for trucking companies can be vital to keeping you moving by helping you pay for all types of expenses. In fact, 55.8% of small businesses such as small trucking companies applied for a business credit card, and 46.8% applied for a personal credit card to use for their business in a three-month time span. Of those who applied, 54% were successful in securing the business credit card, and 63% successfully secured the personal credit card for business purposes. This is all according to the Pepperdine Private Capital Index Report for the 4th quarter 2019.
One key thing to keep in mind if you are a trucking company owner-operator or small fleet owner is that credit cards can be good for certain purchases. However, using them as your sole source of financing may negatively impact your business. In fact, in many cases, credit cards can cost you more money than other options.
Fuel purchases are a very common credit card charge for many trucking companies. Credit cards can cost you more money when you use them to purchase fuel because many fuel stations charge more for fuel purchased through credit cards versus cash. An alternative, that still has the benefit of allowing you not to carry cash and have a way to easily track your spending, is by using a fuel card. Fuel cards allow the carrier to use it and still receive the cash price on fuel rather than paying a higher price with a credit card. In addition to receiving the cash price, you can save up to $.10 per gallon with no minimum fueling requirements. A few cents saved on each gallon throughout the year can add up to a ton of money. It would cost nearly $1,000 annually per truck for fuel without receiving the cash price. Luckily, fuel cards are one of the benefits of partnering with Tetra Capital for freight factoring, as we will load the funds from your freight bills directly onto a fuel card for no additional charge making it even easier to pay for your fuel with a fuel card. This will allow you to receive steep discounts on all your fuel purchases. If you are wondering what are the best fuel cards for trucking we recently spoke with several owner-operators and owners of small trucking companies and put together a comprehensive list including their features and fees, click here to read more about it.
For trucking companies who need a line of credit and have either tried getting one from a bank and been turned down or just assume they don’t have the credit to qualify, a credit card could seem like the perfect quick solution. Unfortunately, the numerous downsides to utilizing credit cards as your source of financing can quickly outweigh the ease of acquiring them. One of the biggest downsides is that if you don’t pay them off in full every month, unless you want to pay their typically large interest rates. Another consideration is that they don’t typically include any added benefits for your business, outside of maybe a small rewards type program. However, if you chose a financing option such as freight factoring you would receive immediate access to working capital and many additional benefits such as free credit checks on your new brokers and shippers and free back office help with tasks such as invoicing, processing, postage, collecting and more. The application process to secure a freight factoring partner is a little bit longer than that of applying for a credit card but not nearly as time-consuming as applying for a bank line of credit. You can also qualify for freight factoring if you have little to no credit as the factoring company will take into account the creditworthiness of your clients.
It is important to look at the pluses and minuses of your different financing options to see which is best for your trucking company. Also, keep in mind that different options work better for different situations and purchases.
*This article has been updated.