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What is Factoring in Trucking: The Ultimate Guide

April 10, 2024 | Factoring
Truck Factoring with iThrive

Let’s talk about something important in the trucking industry that many drivers tend to overlook or not have very much knowledge about: Factoring.

Have you ever found yourself stuck, waiting to get paid for a load you’ve delivered? Whether you’re running low on cash, have bills due this week, or simply just can’t afford to wait around to get paid can be frustrating, but with factoring you don’t have to wait.

We have created a guide to help you get a good understanding of what factoring is, why it’s important to have, and how you can make it work for you.

What is Factoring, Anyway?

So, you’ve dropped off a load, and now you’re waiting to get paid for that load. More often than not the customer you hauled the load for tends to pay within 30 plus days, who can really wait to get paid for the work they’ve done? That’s where factoring comes in. Factoring is where you, as the driver, work with a factoring company like iThrive, to receive a significant chunk of your invoice for the load you just delivered, even that same day.

Related: FAQ’s | iThrive Funding

How the Factoring Magic Works

  • The Players: You (the owner), the factor (your hero), and your customers (those that owe you money).
  • Submitting the Invoice: After you deliver the goods, whip up an invoice, and send it off to the factor
  • Cash Advance: The factor swoops in, checks the invoice, and then sends you your cash — typically 75%-95% of the invoice amount.
  • Payment Collection: The factor then does the heavy lifting, collecting payment from your customer when the invoice is due.
  • Final Settlement: When the invoice is paid, the factor takes a small fee, sorts out any outstanding balances, then sends the remaining funds to you.

Why Factoring is Great for Truckers

  • Eliminate Payment Delays: Factoring means no more waiting and twiddling your thumbs over payments for deliveries. Working with factors can keep your truck operating without and down time due to delayed payments.
  • Stress-Free Collections: Factoring also means no collection headaches. Let the factor handle the chasing while you focus on driving.
  • Cash Flow Flexibility: Factoring gives you immediate access to funds, allowing your business to operate smoothly and seize growth opportunities.

iThrive’s Advantage

iThrive was created by Truckers for Truckers. At iThrive, we have simplified the process of working with factoring companies by offering:

  • Simple Application: Our application is simple, easy to navigate, and easy to understand.
  • Comprehensive Billing Services: Our billing services cover all the bases so you can focus on driving while we handle the paperwork.
  • Speed: We know that time is money, that’s why we prioritize same day funding to get you the cash you need, when you need it.
  • Transparency: With iThrive, you’ll always know where you stand. We believe in transparency every step of the way, so you can trust your finances are in good hands.
  • Personalized Approach: We understand that every driver is unique and every load is different. We take a personalized approach when it comes to YOUR trucking company.
  • Free Credit Checks: We never want our clients to feel the pressure of an unpredictable load. With our free credit check, you can rest assured knowing that you’ll book a load with confidence.

We have a full slew of services for our trucking clients. We believe that the best way for truck drivers to be successful in this industry, is to allow them to do what they do best — drive. iThrive takes the hassle out of waiting for your delivery payment.

Communication between Factor and Owner

Clear and open communication between you (the owner) and the factor is key when it comes to a successful partnership. Make sure you understand the policies and procedures regarding invoice submissions, payment processing, and other key elements of their services. Keep the line of communication open for questions regarding anything related to factoring, you will reap the rewards of that communication.

Knowing your own personal finances surrounding your trucking business can help solidify your relationship with your factor.

Related: Build and Improve Your Trucking Company’s Credit Score

Remember that iThrive is available to answer any questions regarding factoring. Once again, iThrive was created by truckers, for truckers. You can contact us here.