The power of factoring receivables can be harnessed to great effect by the trucking industry, or by a business that uses a fleet of vehicles. In addition to performing the same benefit of substantiating cash flow that it does for other industries, truck factoring can specifically help you pay for fuel, maintain daily costs of functioning, and pay for repairs.

What Does Truck Factoring Entail

Basically, it is the same process involved with accounts receivable, with the proceeds used specifically for maintaining positive cash flow for the operation of your fleet of trucks. You find a company that specializes in purchasing your outstanding invoices and sending you the lion’s share of the total amount; this company will then be responsible for collecting the payments from your clients. The truck factoring accounts receivable company is effectively serving as a middle-person between you and your clients in your B2B operation.

The Types of Truck Factoring

Depending on the amount of liability you wish to undertake, you can either have the factoring company assume full responsibility for your trucking invoice fees (you will be charged an administration fee for this), or do it yourself. The following options are the only ones available:

  • Non-Recourse Factoring: This more akin to a “fire-and-forget” strategy; the factoring receivables company is the one responsible for collecting payment on all of your trucking invoices. As you should expect – there will be a fee for this service. If your trucking company is smaller and lacks the funds to sustain itself in the face of too many bad debts, then this option may be the superior one.
  • Recourse Factoring: With this option, all payments are your responsibility. If any of your business customers or sole proprietors fail to pay, the liability rests squarely on your shoulders. Usually, if you are a substantial trucking company with the working capital and cash flow, this is the better option since you save on administration fees from the factoring company.

Truck factoring is a viable option and worth considering no matter how large or small your fleet of trucks. It is one of the fastest payment times – within a day, you can have your funds – and it is very forgiving of bad credit. For more information, check us out at Triport today.