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What is a Factoring Company for Trucking in 2023?

A factoring company for trucking provides truck drivers with a convenient, reliable, and fast source of getting paid on their unpaid invoices. This company will typically pay its clients within 24 hours of them sending their freight bills in. This is extremely beneficial for trucking company owners as it usually takes freight brokers or shippers 30 to 90 days to pay for a hauled load.

Freight factoring makes cash available so that trucking companies are never low on funds to pay for expenses. It does this by buying the accounts receivables of trucking businesses. The primary benefit of factoring agreements is the fast payment.

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Note that a factoring company for trucking will charge a factoring fee to advance trucking companies the amount of their invoice immediately. Depending on the factoring company, pay times may vary. The best factoring companies will pay their clients within 24 hours of sending in their invoices.

Trucking companies benefit from factoring as it is a way to grow their businesses through getting consistent cash flow. It doesn’t matter if they run a small business or a large one, having access to working capital to stay on top of their company’s expenses is always beneficial.

Have it in mind that this program is especially good for new trucking companies or ones who cannot afford to take a hit from a bad debtor. The trucking company is responsible for bad debtors in a recourse agreement, but the factoring rate is slightly lower because of this. Most factoring companies for trucking also offer additional services to their clients, services like dispatching help and even fuel cards.

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How to Start a Factoring Company for Trucking

If you love the financial industry, then understanding how to start a factoring company for trucking might be the right opportunity for you. Note that freight factoring occurs when a trucking company will sell the outstanding invoices receivable it has to a third party at a discounted price. This usually involves accounts that are difficult for the business to collect. Here are steps to take when looking to start this business.

  1. Start Slow And Learn The Ropes

Unless you’ve already acquired experience maybe as a direct funding agent, then it is usually better to become a factoring broker or agent first. Indeed, there is bigger money in funding deals, but you can still make profits by working with the invoices or handling the advances. You will also want to begin within the trucking industry since your target market is trucking companies. This will help you make some cash while you learn the ropes.

  1. Consider Having A Part-Time Factoring Business

If you have decided to start small with your factoring company for trucking, then doing the work part-time can indeed help you get conversant with the process. This isn’t usually an option if you are going the direct funding route. You will be getting a number of calls after hours to track down invoices, so plan on nights and weekends being dedicated to your new business venture.

  1. Set up A Brick-And-Mortar Office

Note that you will also need to set up a brick-and-mortar office for your factoring company or establish your client interface as an online entity. In either case, standard business equipment will be needed such as computers, desks, file cabinets, etc. Security will be a substantial consideration if a website is maintained and potential client information is gathered. Hire a reputable webmaster that is knowledgeable in providing both design and security features.

  1. Understand Business Licensing

In the United States, some states expect your business to be licensed as a collections agency. You may also need to be licensed as a financial institution. In addition, there may be specific certifications that are required to obtain this license. You will have to be ready for a general business license, a collection agency license, and other local authorizations. Speak with your local county clerk so that you can stay in compliance with your factoring business.

  1. Get A Finance Attorney On Retainer

Have it in mind that factoring contracts can be a challenging bit of legal paperwork. You are also navigating waters of financial collection that may bring about some high levels of risk. Factoring means that you are solely responsible for collecting the payments that are owed, so you will need a finance attorney to help you along the way.

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 6. Prepare For The Tax Issues That Will Be Involved

In the United States, every state has certain tax issues that will need to be addressed for a new factoring company for trucking. Prepare for these by consulting a tax professional to make sure that you stay in compliance.

  1. Determine Financial Health

Outside of the availability of collateral, you will have to analyze and determine the financial health of the borrowers that you are considering for your factoring company for trucking. This may help you to determine when blanket liens may be necessary within the factoring contract. Take your time to bring together outstanding account-receivable documentation from the business, such as the original invoices and accounting of past payment history.

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This information will determine how collectible the invoice is and may require a deviation from the company’s standard-factoring contract terms. In addition, check the health of the borrowing company. Just like was stated above, the financial health of the borrower and the availability of collateral will determine whether a blanket lien is warranted in the factoring contract.


Factoring is a business finance tool used by firms to increase cash flow. A factoring company provides business finance in the form of immediate cash advances for the transfer or sale of a target firm’s accounts receivable invoices.

Starting a factoring company for trucking may not be right for everyone, but for those who love the financial sector, it could be an outstanding business opportunity. Follow these steps and you will be able to run a business that you really love.