Client receiving paid invoice from factoring services, from trucking invoice factoring companies like Prime Factoring in Mississippi

Invoice Factoring Services

Did you know that roughly 82% of small businesses go under due to inadequate cash flow? Yes, that includes trucking businesses. Whether you’re a large trucking company or an owner/operator, you know the various challenges of managing your business - satisfying customer demand, keeping up with changing regulations, managing your fleet of vehicles and drivers, and much more. Meeting the demand of all of those challenges is meaningless if you don’t have a steady balance of incoming funds.

So how does a trucking company that’s still recovering from the effects of the pandemic - a unique time when late payments increased 500% - close the gap between steady liquidity and delayed customer payments? One way is through a handy system called invoice factoring.

What is Invoice Factoring?

Invoice factoring for truckers is an efficient funding method that allows trucking companies to sell their unpaid invoices to a factoring company at a lower price to receive payment quickly rather than waiting for the client to pay the trucking company.

Need an easy breakdown of exactly how invoice factoring works? Here it is in four simple steps:

  1. The trucking company applies for funding through the invoice factoring company and submits the invoices that they wish to be paid.
  2. Specific information about the trucking company is verified by the factoring company, including prior or current liens, credit checks, and other necessary details.
  3. The factoring company is able to pay the trucking company their invoice, often within one day after approval.
  4. The factoring company then awaits the trucker’s client to pay them according to their own regulations.

What Are the Benefits of Invoice Factoring?

Among the most obvious perks of opting for invoice factoring - getting paid quickly instead of waiting on your client to pay - there are many other benefits to invoice factoring that can serve you and your business well. Here’s a few of the other reasons trucking company’s appreciate most from invoice factoring:

  • Flexibility. Invoice factoring is funding on demand, which means truckers and trucking companies are able to access funds anytime they need it for a variety of reasons, including big contracts that can help grow their business, emergency repairs, and other cash flow needs.
  • Easy Approval. Invoice factoring can provide efficient and quick cash flow without needing an ideal credit score. Because banks typically require a sparkling credit score and a minimum annual revenue, traditional financing methods can be difficult to obtain for new businesses or those with lower credit ratings. Invoice factoring is a great option that spares you the hassle of applying for financing through a bank.
  • Non-Dilutive Funding. Invoice factoring is low-risk. Invoice factoring companies don’t require truckers to exchange capital for any part of their company, collateral, or equity.
  • Debt-Free. Since your customer pays their invoice to the invoice factoring company instead of you directly, trucking companies can utilize their consistent cash flow as needed without taking on additional debt. 

Invoice Factoring vs. Freight Factoring

Since you’re reading about invoice factoring, chances are you’ve also heard about freight factoring for truckers. While these systems are similar, there are some significant differences between the two. 

Simply put, freight factoring companies specialize in the transportation field and therefore have in-depth understanding of trucking challenges and needs, including industry-standard terms and payment norms. This level of knowledge enables a freight factor to extend tailored products and solutions to truckers and trucking companies. Invoice factoring companies serve a broader range of industries, so they may lack the insight in the trucking industry that a freight factoring company will have. In addition, freight factoring agreements are often made when the driver collects the load and starts the journey to their destination. The result of this is that the driver doesn’t receive as high of a cut of the total payment as you would with invoice factoring.

Why Partner with Prime Factoring?

If your business decides to opt for invoice factoring, you need a company that has your back. Prime Factoring will reduce your cash flow to-do list and subsequent office work so that you have more time to focus on what matters most - getting your loads delivered and keeping your customers satisfied.

Go ahead and apply today or contact us to learn more about our invoice factoring services. We’re here to help your business thrive!