9 Best Factoring Companies for Trucking

Factoring companies for trucking, also called freight factoring companies, give trucking companies cash in exchange for outstanding invoices. They can be helpful to trucking companies that need working capital quickly or don’t have the staff to manage invoicing and collections, but be cautious about potentially unclear costs and contracts.

Here are our picks for freight factoring companies, as well as additional information to help you decide whether this kind of small-business loan is right for your business.

Best trucking factoring companies for funding speed

These factoring companies for trucking offer some of the fastest funding times.

Time to funding: Minutes via its proprietary Blynk payment service; otherwise, same-day and next-day funding.

Good to know: Company factors freight invoices on nights, weekends and holidays. Its proprietary Blynk payment service, launched in 2020, allows customers to get paid via debit, Zelle or bank transfer. Apex specializes in small and midsize trucking companies.

Headquarters: Fort Worth, Texas.

Time to funding: One hour during the week.

Good to know: Company’s mobile app allows customers to submit invoices to be paid right from a smartphone. TAFS is a recourse-only factoring company, meaning that if the customer ultimately doesn’t pay your invoice, you pay the factoring company. In other words, you bear the risk of nonpayment. TAFS does factoring in several other industries too.

Headquarters: Olathe, Kansas.

Time to funding: Within 24 hours.

Good to know: Offers discounts to veterans. Also does factoring in distribution, staffing, oilfield, textiles and manufacturing industries. The company’s RTS Pro Factoring app lets customers upload invoices, submit invoices in bundles, use the camera to scan invoices and access reports. It also helps find fuel, tire and maintenance discounts.

Headquarters: Overland Park, Kansas.

Time to funding: The same day you deliver your load.

Good to know: TBS offers a program in which you can finance 50% of your truck insurance down payment through eight weekly payments from your factored invoices. The company also offers bookkeeping services.

Headquarters: Oklahoma City.

Best for trying freight factoring for free

These factoring companies for trucking offer customers a chance to use the service before fully committing.

Time to funding: First funding takes up to 48 hours but subsequent invoices process faster.

Good to know: Customers get an automatic, preapproved line of credit of up to $2,500 per truck. Transferring money from eCapital to your bank account is $10. The company also offers a 90-day free trial. Fees start at 2%.

Headquarters: Aventura, Florida.

Time to funding: Typically within 24 hours.

Good to know: Company says a $1,000 invoice will likely cost $25 to $40 (2.5% to 4%) in factoring fees. It also waives the factoring fees for your first invoice as sort of a free trial.

Headquarters: Carlsbad, California.

Best for upfront factoring pricing

Few factoring companies for trucking disclose their prices. These companies offer at least a peek.

Time to funding: Within 24 hours.

Good to know: Company does recourse and nonrecourse factoring. OTR Capital says it funds 96% of the invoice value, implying a 4% fee.

Headquarters: Roswell, Georgia.

Time to funding: Within 24 hours and sometimes sooner.

Good to know: Discounts available if you sign a six-month or one-year contract. Recourse factoring fees start at 3%.

Headquarters: Birmingham, Alabama.

Time to funding: Same day.

Good to know: Fees start at 2%. Works with startups and trucking companies with one to 100 trucks. No mobile app available.

Headquarters: Weatherford, Texas.

What is freight factoring?

Freight factoring is a process in which a factoring company buys your invoices at a discount and collects payment from the customers on those invoices. The arrangement creates a source of fast cash for the trucking company.

There are two types of factoring companies for trucking:

1. Recourse factors. If the customer ultimately doesn’t pay the invoice, the trucking company pays the factoring company. The trucking company bears the risk of nonpayment.

2. Nonrecourse factors. If the customer ultimately doesn’t pay the invoice, the trucking company doesn’t have to pay the invoice. The factoring company bears the risk of nonpayment, which is why nonrecourse factoring typically costs more than recourse factoring.

Do I need a factoring company for trucking?

A factoring company for trucking can be a source of quick cash, which could come in handy if a trucking company is having trouble making payroll or paying other bills, or if it doesn’t want to take out a loan or other financing. In addition, companies that don’t have the time or staff to deal with collecting money from customers might find factoring attractive.

• Fast cash.

• Flexible — factor only what you need when you need it.

• Credit score doesn’t matter.

• May cost more than bank financing.

• Company may come after trucking company if customers don’t pay.

How much do factoring companies charge?

Trucking factoring companies buy accounts receivable at a discount, meaning that trucking companies selling invoices won’t receive the full value of those invoices. The size of that discount is one of the key factors to consider when choosing a factoring company for trucking.

However, it’s rare to get an upfront price from factoring companies because they typically base their discount rates on a variety of factors:

• Whether you want recourse or nonrecourse factoring.

• Who your customers are.

• The volume of the invoices.

• Whether you want to pay a flat factoring fee (the same percentage fee for every invoice) or a tiered factoring rate (a lower fee on invoices that pay quickly and a higher fee on invoices that pay more slowly).

• Whether the company also charges invoice submission fees or invoice processing fees.

For these reasons, it’s important to review the contract terms of any factoring agreement and make sure you understand the costs before you sign up.

Alternatives to freight factoring

Freight factoring is just one way to borrow money quickly. These other options might be viable alternatives for your trucking business.

Borrowing money using a credit card gives you the opportunity to keep 100% of what your customers pay you. Credit cards can carry various rewards, such as travel miles or cash back, and a business gas credit card may make sense for a trucking company. But be sure you can pay your credit card balances off in full, because the interest charges may be higher than what you’d pay in factoring fees.

If you need access to ongoing working capital, drawing from a business line of credit might be cheaper than factoring to cover short-term costs. You’ll likely have a higher spending limit with a line of credit than with a business credit card, but there may also be higher qualification hurdles to jump in terms of credit score and financial performance.