Freight Factoring

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Top Factoring Service Options for Trucking Companies

It’s challenging enough to operate a business — especially a small one or if you’re just starting out — and maintaining a reliable, steady cash flow can mean the difference between sinking or swimming. Unpaid invoices throw a huge wrench into the works, especially if you depend on the incoming funds for payroll or rent.

That’s why Propel Losgistics has teamed up with professional factoring companies to provide our clients with factoring services that can make all the difference in the way they do business.

What Is Freight Factoring?

Truck factoring — also known as freight factoring — helps carriers and owner-operators convert unpaid invoices into immediate cash. A freight factoring company essentially purchases outstanding accounts receivable, typically advancing 80% to 90% of the invoice value upfront, and then takes responsibility for collecting payment from the customer.

Why You Should Use a Truck Factoring Service

In the trucking industry, factoring means transferring the risk of non-payment to a third party. For many trucking companies, even receiving a discounted amount on invoices is worthwhile, as working with a freight factoring specialist provides immediate cash flow. This quick access to funds helps cover overhead expenses and enables companies to take on more jobs and increase their earnings.

How To Get Started

Propel Logistics’s job is to provide the best loads in the market for every driver. Our expert team ensures that drivers from any region and state get high-quality and best-paying loads.

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The Benefits of Factoring for Trucking Companies

We’ve already highlighted some of the benefits of factoring for trucking companies, but let’s take a closer look. It’s understandable that drivers may hesitate to give up a portion of their profits — an unavoidable part of working with a factoring service in the trucking industry. However, this small trade-off can bring significant advantages, helping businesses and drivers alike improve cash flow, operate more efficiently, and even boost long-term profitability.

There is often a delay between completing a job and receiving payment. While this may not be an issue during periods of strong business and high revenue, it can create serious challenges for drivers during slower times. It’s also unfair — the truck driver has fulfilled their obligations but remains unpaid.
Factoring eliminates this concern. A third-party freight factoring company provides immediate payment, ensuring drivers receive their funds quickly and without hassle.

Planning for the future can be challenging for truck drivers. Even when new jobs are coming in steadily, payment delays make it difficult to predict exactly when funds will be received. This unpredictability becomes a major hurdle, especially when seeking loans or attracting investment for business growth. Simply put, unreliable cash flow makes it harder for drivers and owner-operators to expand their operations.
By using a truck factoring service, this uncertainty is eliminated. Factoring provides a steady, predictable income stream, allowing drivers to demonstrate consistent revenue. This reliability makes it easier to secure loans, attract investors, and confidently grow their businesses.

Some drivers may not like the idea of accepting a factored order. After all, when accepting this kind of order, the driver can only expect to receive around 80% or 90% of the total cost of the order, which may seem unfair as it is the driver who is doing the actual driving. However, the idea of factoring services for a trucking company or driver is that they accept this discounted rate so that they can connect with a more reliable payment.

This gives you flexibility as a truck driver or owner-operator. You can accept factored orders that provide you with a baseline of income — a regular stream of revenue that you can put your faith in. Then, you can enhance this revenue by taking on other orders at full payment. As your situation changes and you become more or less risk-averse, you may decide to shift the ratio one way or another — the choice is yours, thanks to this increased flexibility.

An unreliable payment schedule is one thing, but the risk of not getting paid at all is an even more serious concern for truck drivers. Disputes with clients, unscrupulous customers, and a whole host of other factors can contribute to the risk of non-payment. For small trucking businesses or for truck driver owner-operators, this can be catastrophic. Too many businesses have run into serious trouble because they cannot secure the payments they are entitled to.

This is obviously a major benefit for truck drivers. With a truck factoring service, the risk of non-payment is taken on by someone else. You do not need to worry about receiving the money due to you, and you can focus on other — more positive — aspects of running your business.

How Trucking Factoring Works

The general process you encounter with trucking factoring is as follows:

You invoice your client for work done.
You assign unpaid invoices to a truck factoring service. If you are doing contract factoring (high volume), you are assigning all your unpaid invoices to the trucking factoring company. If you are going by way of spot factoring for trucking (low volume), you decide which invoices you will assign for truck factoring services.
The truck factoring company pays you the agreed-upon advance. Once everything is set up, this can be as soon as within 24 hours.
Your client pays the truck factoring service — it is now the responsibility of the factoring company to chase down clients for payment.
Once the invoice is paid, the factoring company will take its fee cut and then send you the balance.

Which is best for you: recourse or non-recourse factoring?

Your agreement for truck factoring services can be a recourse agreement or a non-recourse agreement.

If you have a recourse agreement and your customers do NOT pay their invoices, you are required to buy them back. The trucking factoring company may even charge additional fees.

If you have a non-recourse agreement, once the factoring company is assigned the unpaid invoices, they belong to the factoring company. If the clients don’t pay, it is no longer your problem. As a consequence, the rates charged by factoring companies tend to be higher for non-recourse agreements.

Propel Logistics offers dispatch services for owner-operators and fleets since 2015. We manage load booking, billing, paperwork, broker communications, and DOT compliance — so you can focus on driving.