Factoring Blog

How to Pay for Truck Repairs with Factoring Financing

freight truck repairsThere is nothing more challenging for a small trucking company, or an owner operator, that having to deal with an unexpected truck problem. Now you have a unit that is not working and you are stuck with the repair bill.

If you have the money, this will only be an inconvenience. You can pay the bill and get the truck back on the road and moving loads. But if you don’t have the money to pay for the repairs, you will be in big trouble. Your truck will be out of service and not generating income, until you can pay for repairs.

One solution that may work

Obviously, you need to solve this problem fast. One way to finance your freight truck repairs is to use a conventional financing service. These companies often finance your repairs and secure them using your truck and equipment as collateral. This can work if you own your truck and if your truck has enough equity left to cover the repair bill. However, if your truck does not have any equity left you will often be out of luck – with no options.

Fix the problem – pay for repairs

The problem with repair bills is that they always come at the wrong time, when you are waiting for clients to pay for previous deliveries and are low on money. And since most shippers and commercial clients pay in 30 days, you may be in for a long wait before you are able to get enough money to pay the repair shop.

This can be both challenging and frustrating. However, it can be solved relatively easily by using freight factoring financing.

What is freight bill financing?

It’s a financial tool that allows you to turn your slow paying freight bills into immediate cash by financing them. Basically, the freight financing company gives you funds and uses your bills as collateral. You can use the money to pay for repairs, fuel or other company expenses.

How does it work?

It’s a simple solution. The freight factor purchases your receivables, often in two installments. The first installment is for 90% of the invoice and is wired to your account as soon as the load is delivered and confirmed. You get the remaining 10%, less the factoring fee, as soon as your customer pays for the freight bill in full.

Smaller carriers can often qualify for a single installment transaction, where the factor advances up to 97% immediately. The remaining 3% (this varies) serves as the funding fee.

Easy way to pay for repairs

The advantage of using a freight factoring plan is that it will improve your cash flow. This helps ensure that you are never left without enough money to pay for repairs and other critical expenses. Most carriers factor a portion of their receivables on a regular basis, which helps ensure they always have cash on hand to pay for expenses.

Easy to get

Getting approved for this program is relatively easy. The most important requirement is to have credit worthy shippers and commercial clients since the freight bills backs the transaction. Aside from that, your company needs to be established,operating and free of major issues (except cash flow problems). Getting funded can take just a few days, especially if you have all the required information to set up the account.

Get back on the road

One of the main advantages of using truck factoring is that it will improve your cash flow. It can help your freight carrier grow, especially if you use it to get more clients. This makes it an ideal alternative for trucking companies that need to pay for freight truck repairs, but can’t because their money is tied in slow paying freight bills.

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