If you have ever tried to secure financing through a typical bank and other lenders you know one of the first things they look at is your credit. For many trucking owner-operators and small fleet owners who have little or bad credit, this can spell disaster. While you take the time to build your credit or improve your credit there are a few options to help you avoid the frustration and keep you from considering such options as personal credit cards, payday loans or merchant cash advances, which can really cost you a lot of money and can cause many other problems for your business.
Trucking Factoring is a great financing option and best of all it is not based on your credit.
A trucking factoring company will run credit checks on your brokers and shippers and base their decision and rate on that – not yours. Making trucking factoring an excellent option for new trucking companies and others with not so perfect credit. Since they are looking at your brokers and shippers credit, they are also able to provide you with information on their creditworthiness so you can decide if they are a good partner for you since their credit is often a good indicator of their likelihood to pay you for the loads you haul.
So what is trucking factoring and how does it work?
With freight bill factoring you go through a quick and easy application process that is not nearly as time and paperwork intensive as many other lenders application processes. Both you and your customer have to be approved since it is their credit that is being used for the financing. You choose which and how many of your customers go through the application process. Once the application process is completed all you have to do is deliver the load as you normally would, to the approved customers and submit the freight bill to your client and to the factoring company. The factoring company will then send you the funds for the freight bill within hours, minus their small fee. They then wait to be paid by your clients while you use the funds to cover your expenses such as fuel, maintenance and more.
In addition to factoring your freight bills, factoring companies may also provide fuel advances allowing you to get funds for fuel once you pick up the load and before you even deliver it.
Not only will a factoring company get you access to funds quickly they also provide invaluable additional services to help trucking owner-operators and small fleet owners be successful and save money. Some factoring companies will place the funds directly onto a fuel card, which can save you up to $0.40 per gallon with no minimum fueling requirements and save you the time of having to ensure funds are available on the fuel card. Additionally, some factoring companies will handle invoicing, processing, postage, collecting and more for you at no additional cost. Plus, did I mention that those credit checks that are done on your clients and potential clients could be done at no cost to you when you partner with certain factoring companies?
Don’t let worrying about how your credit will impact your financing options for your trucking business any longer. Give us a call today at (801) 676-0182 to learn if trucking factoring from Tetra Capital will work for you.