Transportation Factoring for Invoices

Get invoices paid in days to keep business rolling

Managing cash flow is vital for transport and trucking companies. On top of making sure the work gets done, you also need to make sure you have enough cash in bank to make payroll, cover repairs and maintenance for your fleet, pay for fuel and fuel cards, manage all trucking operations and equipment financing, and balance the costs of day-to-day business expenses. Talk about pressure! Add to that the fact that many brokers and shippers pay 30, 60, or even 90 days after being invoiced, leaving you without the working capital you need to cover expenses. You can also forget about taking on company growth projects when your cash flow is tied up in accounts receivable.

Wait too long to get paid for outstanding customer invoices, and your business might come to a screeching halt. We know how stressful a problem like lengthy payment terms can be — taking you away from more strategic activities that could grow your business. As entrepreneurs ourselves, we’ve been there! (And it’s why we started FundThrough’s transportation factoring business in the first place). Instead of waiting for months on payment, outstanding invoices are paid within days.

Transportation factoring solves cash flow problems and gives your business the financing and working capital you need to run your business. With fast, flexible factoring services at your fingertips, you have peace of mind that your expenses are covered, and the ability to go after big jobs that will help you continue to grow.

What Is Transportation Factoring?

Transportation factoring is a type of short-term financing where a transport or trucking company sells its outstanding invoices to a factoring company, like FundThrough, in exchange for funds ahead of schedule. This convenient payment solution works just like regular invoice factoring, except it’s specific to businesses in the transportation industry. Once you sell an unpaid invoice to the factoring company, you get a percentage of the invoice value as an advance. The factoring company then works with your customer to settle the invoice according to the original payment terms. In most cases, you can get a positive cash flow boost in as little as a few days, so you can get back to hauling people, products, and loads. Faster payments mean no more turning down that next big contract, or putting off your goals for business growth. This funding freedom is why the popularity of factoring continues to grow.

In a nutshell, transport invoice factoring or freight factoring is a financial service that:

  • Provides fast access to cash with little or no waiting period. Many factoring companies can provide same-day or next-day payments.
  • Removes the challenge of payment collection from slow-paying customers on your own.
  • Gives you a cash flow boost when you need it to go after business growth opportunities.
  • Has fewer hassles (including an easier application process and faster payments) than traditional bank financing like credit cards.
  • Is ideal for startups and new businesses with little or no credit history, since transportation factoring relies on the creditworthiness of your customers.
  • Is not a loan, so you don’t have to worry about interest rates, monthly payments, or taking on debt.
  • Qualification is much easier than a conventional bank business loan or line of credit.

How Does Transportation Invoice Factoring Work?

FundThrough provides working capital based on the size of your outstanding customer invoices. We use a combination of AI and automation to make the funding process fast and easy. The transportation factoring process is actually pretty straightforward. Here’s how this convenient payment solution works:

  • Transportation companies or those servicing the trucking industry send invoices to their customers. 
  • You can then submit eligible unpaid invoices through FundThrough’s online portal for fast funding.
  • Once approved, FundThrough advances the value (minus a small fee) in days.
  • FundThrough waits for outstanding invoices to be paid by your customers.
  • You get busy putting your funding to work, whether that’s covering everyday operating expenses, dealing with an unforeseen emergency, or bidding on larger projects. 

FundThrough is an industry leader in freight bill factoring. By leveraging technology to automate the payment of your outstanding invoices, FundThrough can provide you with a funding decision and process your invoices in a matter of days. 

Benefits of Transportation Factoring

Holding receivables on the books for months costs small and mid-sized transport businesses as much as $3-trillion annually, according to Sage. In simple terms, that means that 1 in 10 invoices are not paid on time. Cash flow is stifled, and the working capital needed to grow your company is held up. Sure, freight invoice factoring can help you get outstanding invoices paid faster, but there are so many more additional benefits of factoring you might not have thought about, including: 

  • No debt or dilution. Transportation factoring is not a bank loan, which means that there’s no debt on your balance sheet, and you don’t have to worry about expensive monthly payments. Freight invoice factoring is also a non-dilutive source of funding, which means you don’t have to give up control of your business to get the cash you need.   
  • Fast invoice approval. When you factor invoices, they can be approved and paid in a matter of days, giving you access to needed funds in a hurry. FundThrough also advances up to 100 percent of invoice value.
  • Flexible and easy process. With FundThrough, you can create a free account in minutes, all online. The process is super simple, especially compared to securing other types of business financing. AI, automation, and integrations with accounting platforms like QuickBooks make it easy to get funded, and you only fund the invoices you want — there’s no monthly minimum factoring requirement.
  • Grow your business. When you factor invoices with an industry leader like FundThrough, you get the working capital you need to grow your business by taking on bigger hauls, more jobs, staffing up, and maintaining or upgrading your fleet.
  • Win more contracts. There is no need to turn away work because you don’t have the cash reserves to sustain your business and pay your expenses until invoices are paid. Freight invoice factoring gives you the cash, and FundThrough gives the confidence to bid on more jobs.
  • Ease of qualification. Your credit score, credit history, and time in business aren’t as important when applying for factoring. Qualifying is a lot easier than with a business loan or line of credit from a bank. It’s your customers’ creditworthiness we’re more concerned with, since they’re the one paying the invoice. Factoring also lets you skip the hassle of filling out endless amounts of paperwork as part of the lengthy (and time consuming) process associated with bank financing. As an added bonus, applying for factoring doesn’t affect your credit score!
  • Outsource the collection process. It’s not easy collecting on your unpaid receivables. It takes an investment of time on your part — valuable time that would be better spent growing your business. Factoring eliminates this stress and let’s you get back to meeting the demand of growing your business.
  • No long-term contracts. Once the factored invoice is paid to FundThrough, there’s no further obligation on your part. (But don’t worry, we’ll be here for you whenever you need another cash flow boost!)

What are the Disadvantages of Transportation and Trucking Company Invoice Factoring?

Invoice factoring has many benefits for the transportation and carrier industry. Along with the advantages, there are also a few perceived disadvantages.

  • Transportation factoring fees. Some factoring companies charge hidden factoring fees, such as an invoice submission fee, wire transfer fee, or termination fee. However, with FundThrough, what you see is what you get. We don’t charge hidden fees, and and there is no cost to open an account. See our pricing page for more info.  
  • Less control. Your customers no longer pay you — instead, they pay FundThrough. This means you have less control when factoring transportation receivables. However, we always treat your customers like our own.
  • Difficult to account for. Some people think that accounting for transportation factoring transactions in their bookkeeping software is challenging, but our step-by-step guide makes it easy.

How Does the Transportation Industry Use Invoice Factoring?

There are many use cases for factoring, and each company will have their own reasons for why they want to factor invoices and how they use their newfound funding boost. Aside from the obvious use case of getting invoices paid ahead of lengthy net terms, the transportation industry uses invoice factoring for:

Growth projects. Without enough cash on hand, it can be difficult to cover everyday expenses and go after big hauling jobs. These types of business growth opportunities allow you to expand your business, but you need to be able to make sure you have cash on hand to take on new opportunities. Transportation factoring can help bridge any cash flow gaps you might experience during periods of company growth.

Covering payroll. Trucking and freight companies are often stuck waiting weeks or even months to get paid by their customers. This can cause all sorts of cash flow difficulties. With transportation factoring, you can get outstanding invoices paid in a matter of days vs waiting for weeks on extended net terms, which means you always have payroll funding.

Purchasing equipment and supplies. When a new job comes in, you might have to purchase equipment and supplies to get it done. Transportation factoring gives you access to flexible funding faster than a bank.

Hiring staff. As your business quickly grows, you need to be able to hire staff to get the job done. Transportation factoring gives you the funding you need, when you need — even if it’s on short notice.

What Is the Typical Charge for Transportation Factoring?

The main factoring fee is also called the discount rate, and is the amount of money that the freight factoring company withholds from the invoice total as their payment for advancing cash and waiting to get paid for you. Discount rates vary across different trucking factoring companies and are based off their own specific criteria, so we can only speak for FundThrough.

With us, you’ll always know the cost of factoring before you fund an invoice. We don’t charge hidden fees, and and there is no cost to open an account. See our pricing page for more info on our freight factoring rates.

Because we believe in transparency, we clearly communicate your total cost of invoice factoring before you fund, so you can make an informed decision.

Global Pipeline partnered with FundThrough to accelerate its cash flow, making it possible for them to scale up on larger projects and make bids on projects worth millions.

Transportation Factoring Company: What to Look For

Not all factoring companies are alike. Some specialize in only a few industries. Others may have high fees or lack pricing transparency. As a transportation company, it’s vital that you work with a factor that understands transportation factoring basics, and the unique aspects of your company’s lack of cash flow.

When choosing the right transportation invoice factoring company, you’ll want to consider a variety of factors:

  • Experience. A factoring company that has extensive experience in the transportation industry can make the process easier for you, and give you confidence that they can help. FundThrough has extensive experience with helping companies in the freight and trucking industry grow while covering ongoing operating expenses, with the track record to prove it.
  • Industry expertise. The payment processes for transportation businesses are often industry-specific. A receivable factoring company who is unfamiliar with the industry will not be as knowledgeable about this. Many transportation factoring companies also have relationships with many buyers in the space. This can eliminate the need to make a cold introduction to your customer. Finding a factor with industry expertise will save you the time (and headache) of having to teach them all the ins and outs and makes your factoring choice easier.
  • Satisfaction rating. Any company worth their salt in the freight factoring industry should have positive customer reviews, and should also give you a specific customer service contact to work with who provides prompt, transparent communication, and talks to you first if they need to contact your customer. At FundThrough, we provide dedicated account managers, and take very seriously the importance of treating your customers like our own
  • Easy account setup. Many funding companies for transportation companies still use manual paper-based processes that slow down the factoring process and waste your time. Look for a company in the freight factoring industry that uses technology to help streamline and speed up the process — like FundThough!
  • Advance rates. It’s probably no surprise that the best transportation factoring companies offer 100% advance rates. Competitive rates are important, but you need all your money up front so that you can make the most of getting freight invoices funded, — so make sure to compare advance rates.
  • Fees. Not all companies in the transportation factoring industry are upfront about their fee structure in their factoring agreement. A company with a flat rate or low rate could end up charging hidden fees — you need to know about all fees upfront, or you could end up paying more than if you’d gone with another factoring company.

In addition to the benefits we’ve already covered, FundThrough also: 

  • Cuts the average wait for invoice payment by 97%.
  • Uses automation and AI to streamline the application and approvals process. 
  • Is extremely flexible — fund only the invoices you want, when you want. There’s no monthly minimum factoring requirement or long-term obligations once any funded invoices are paid. You can sit back and enjoy consistent cash flow, or strategic boosts to your business finances with our truckstop factoring services.
  • Offers unlimited funding. As a revenue-based financing solution, the more you invoice, the more funding you can access.
  • Has no hidden fees, upfront pricing.
  • Helps you build your business with the money you’ve already earned — no taking on debt or giving away equity required.

Trucking Invoice Factoring FAQs

Your questions answered.

There are a few differences between non-recourse and recourse factoring. Recourse factoring means that your company is responsible for any invoices the factoring company cannot collect on. It is a common type of factoring.

With non-recourse factoring, the factoring company assumes the risk for non-payment of customer invoices. There are usually stipulations on which invoices the factoring company will cover. This type of factoring is more expensive.

Any company that moves passengers and cargo can benefit from transportation invoicing as long as they invoice other businesses. Types of businesses include:

Trucking companies, freight brokers, railroads, airlines, marine companies, couriers, automobile transport companies, oil and gas transporters, dump truck companies, shipping companies, fleets, cruise ship companies, OTR trucking, and start-up transportation companies

Quality freight factoring companies will draw up a factoring arrangement between your business and the factoring company. In this factoring contract, there may be a stipulation that you can only work with one factoring company while under contract. 


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