Did you know that 99.7% of the carriers in the U.S. have 11 to 100 trucks? There are more than 750,000 carriers in the U.S., so there’s a lot of competition trying to get business. This competition can seem brutal, especially when you’re trying to grow or maintain your trucking business in a very turbulent industry.
What’s causing this turbulence? Several things have steamrolled into bigger problems. The pandemic that started in 2000 was predicted by then-President Trump to be over by Easter. That didn’t happen as it spread quickly and went on for years.
As online purchases increased, there was a severe driver shortage that hasn’t completely rebounded. Grocery prices skyrocketed with the recession and increased Fed prime rate that’s strained business owners and consumers. Add in increased fuel rates and it’s been a struggle, especially if your clients pay you months after you completed the work.
If you haven’t looked at the benefits of freight factoring, it’s time. When you secure competitive factoring rates, you gain the benefits of immediate payments that prevent excessive debt. Saint John Capital (SJC) has a guide to help you navigate freight factoring and secure the best freight factoring rate.
Slow Payments Cripple Trucking Companies
Many trucking companies get paid 30, 60, or even 90 days after delivering freight, supplies, or other merchandise and items. While it’s convenient for brokers and shippers to take longer to pay, it’s frustrating to you.
You can’t take months to pay your driver’s wages. You can’t tell the state that you have to wait 90 days before you can afford to renew licenses or permits. You cannot go months skipping your insurance. When you’re not being paid on a timely basis, your bills stack up. You have to juggle what gets paid and what doesn’t.
While you wait, you’re tapping into your business credit cards where the interest rate is well over 20%, which puts you deeper into debt. You pay a bill late, so you get hit by costly late fees. It impacts your credit rating, which makes potential new clients avoid you.
You might be tempted to tap into your personal savings account, but that’s even riskier. What happens if your client never pays? You’re out the money you needed for rent, your mortgage, your family’s food and necessities. It’s a bad cycle to get trapped in.
Instead, you could get paid as quickly as the same day. You deliver a load and have a signed bill of lading. Send that electronically through an app to your freight factoring company. They process it and send payment to your gas card or business debit card. You have the money you need to keep your business running normally. All you lose is a small fee that’s usually less than 5%.
Fast Payments Are Just the Beginning of the Benefits
While immediate cash payments are great, SJC offers so much more. We provide fuel discounts to our factoring partners. Imagine how much more money you’d have in the bank if you were saving a substantial amount on every gallon of gas or diesel.
Click and Pay API is essential in today’s business world. Instead of mailing or faxing anything, send invoices in seconds and get paid just as easily.
Your office staff will love having extra time to complete other necessary tasks. Instead of spending hours every month on invoicing and chasing payments, they can focus on taking more time finding new clients, arranging work schedules, and tracking driver locations. They have time to answer client questions and address concerns. It ends the need for forced overtime or forcing clients to have long waits on hold.
If you need a business line of credit, it’s another service SJC offers. We have low-interest lines of credit for businesses. It’s a good way to cover larger business expenses that you need broken down into smaller payments but don’t want to pay high interest on a credit card.
Best of all, you can pay bills on time. No more waiting until you get paid to pay a bill that was due last month. Your credit rating improves, and that makes you more appealing to newer, high-paying clients.
Tips for Getting the Best Rates During Turbulent Times
Freight factoring rates depend on a number of factors. Start by sharing how many trucks are in your fleet. The more you have, the lower your rate. But, even for independent truckers who only have one truck, rates are still much lower than the competition.
Rates are also different if you have a non-recourse or recourse arrangement. Non-recourse arrangements protect against your client’s failure to pay due to bankruptcy or closures. Recourse arrangements have a lower rate, but if your client fails to pay, you have to return the payment the freight factoring company made to you.
If you take on a new client that is a higher risk, it could impact your rates. Always run business credit checks before you sign a new client. Make sure they’re low risk and always pay on time by carefully going over their business credit report.
Don’t be afraid to negotiate. The worst that can happen is you’re told no.
Questions to Ask Before You Sign a Contract
Before you sign any contract, ask every question that comes to mind. Make sure all of the contract’s details are clear and understandable. If anything confuses you, ask for clarity, even if that means they have to rewrite sections. You need to make sure you understand:
- Are there hidden or unexpected fees that I might face?
- Do I have to factor every invoice or can I pick and choose?
- Am I locked in for a certain number of months or can I cancel at any time?
- Am I obligated to meet any quota?
- How do I reach customer services? What are the hours?
- How long does it take for processing and payments to arrive?
As it takes a conversation to determine freight factoring rates, you benefit by comparing rates with several companies. While one company’s rates may seem low, you’ll learn if there are hidden fees or strict requirements that make a low rate less favorable in the long run.
Saint John Capital provides the industry’s best rates and helps you avoid any hidden fees and unfair requirements. We’re never going to penalize you if you have a client who pays on time that you’d rather continue to invoice on your own. Reach us online to learn more about our freight factoring options and negotiate the lowest rate.
