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Running a business, especially a small one or when just starting out, can be challenging, and maintaining a reliable, steady cash flow is crucial for success. Unpaid invoices can disrupt your operations, especially if you rely on incoming funds for payroll or rent.
That’s why T Mart has partnered with professional factoring companies to offer our clients factoring services that can significantly impact the way they conduct business.
What is Freight Factoring?
Freight factoring, also known as truck factoring, enables carriers and owner-operators to convert unpaid invoices into cash. Essentially, a third-party freight factoring company for trucking purchases outstanding accounts receivable at an advance rate, typically ranging from 80% to 90% of the value, and then manages the collection of those unpaid invoices.
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What is T Mart
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T Mart mission is to offer the top-notch loads available in the market for all drivers. Our experienced team works hard to make sure drivers from any region or state receive high-quality and well-paying loads.
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Why You Should Consider a Truck Factoring Service
Factoring in the trucking industry shifts the risk of non-payment to someone else. For many trucking companies, receiving a discounted amount for invoices is worthwhile because it provides immediate funds to cover overhead costs or take on additional work to increase earnings.
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Benefits of Factoring for Trucking Companies
Let’s delve into the advantages of factoring for trucking companies in more detail. While drivers may initially hesitate to part with a portion of their profits, working with a factoring service can offer significant benefits for both businesses and drivers, potentially leading to increased profits in the long run.
- Swift Capital Upfront
Getting paid for a job can sometimes take time, causing challenges for drivers, especially during lean periods. Factoring eliminates this concern as the third-party company pays upfront, ensuring drivers receive their capital promptly.
- More Reliable Source of Revenue
Forecasting future income can be tricky for truck drivers, given potential delays in payments. Factoring orders secures a reliable income stream, making it easier for drivers to attract investors, qualify for loans, and grow their business.
- Better Flexibility in Income Solutions
While accepting a factored order means receiving around 80% to 90% of the total cost, it provides a reliable payment. This flexibility allows drivers to accept factored orders for a steady income and take on other full-payment orders based on their risk tolerance.
- Reduced Risk and Better Service
Unreliable payment schedules and the risk of non-payment can be significant concerns for truck drivers. With factoring, the risk of non-payment is shifted to the factoring company, freeing drivers from worrying about receiving owed money and allowing them to focus on running their business.
How Trucking Factoring Works
The general process of trucking factoring involves:
- Invoicing your client for completed work.
- Assigning unpaid invoices to a factoring service, which pays you an agreed-upon advance, typically within 24 hours.
- The factoring company takes responsibility for collecting payment from your client.
- Once the invoice is paid, the factoring company deducts its fee and sends you the remaining balance.
Choosing Between Recourse and Non-Recourse Factoring:
When considering truck factoring services, you’ll encounter two types of agreements: recourse and non-recourse.
Recourse Agreement
- If your customers don’t pay their invoices, you must buy them back.
- The factoring company may charge additional fees.
- Rates for recourse agreements are generally lower.
Non-Recourse Agreement
- Once the factoring company receives unpaid invoices, they belong to the company.
- If clients don’t pay, it’s no longer your problem.
- Non-recourse rates are typically higher due to the reduced risk.
Pros and Cons of Factoring for Trucking
Pros:
- Few qualification requirements, mainly based on client creditworthiness.
- Almost immediate funding, receiving most of the sum upfront.
- Financing grows with business growth as the value of assigned invoices determines the advance amount.
Cons:
- Can be expensive, as a portion of the sum owed is lost to the factoring company’s discount rate.
- Costs may increase if the client doesn’t pay the invoice, especially in recourse agreements.
Why Choose T Mart Factoring Services
Focused on Protecting Profits
Committed to securing the best from truck factoring services to protect clients’ profits.
Strong Track Record
Proven success with numerous clients benefiting from freight factoring services.
Understanding the Trucking Industry
In-depth knowledge of the trucking industry to select the ideal factoring partner.
Trucking Invoice Factoring Made Easy
Collaborating with professional factoring companies to offer effective services.
Expert Support
Dedicated to providing expert guidance and support to clients.
Learn More About Our Truck Factoring Services or Get Started Today
Contact us to explore whether factoring makes sense for your trucking business. We help find reliable partners offering quality factoring services to support your business growth and maintain a healthy cash flow.
FAQ
What does T Mart do for your business?
Simply put, we save you time so you can earn more money. Many owner-operators start this business to drive loads and make money, but end up overwhelmed by paperwork, regulations, and negotiations – things that take away from your profit-making activities. T Mart takes care of all the business support tasks you want to offload, making your business run smoothly. This way, you can take on more loads. Plus, when it comes to negotiations, we work to get you the best rates for your loads, putting more money in your pocket.
Isn't it always simpler and cheaper to hire an in-house dispatcher?
Surprisingly, no. To bring in capable and skilled talent, you have to go through a thorough recruitment process, which takes time and, if you use headhunters, money. Even if you find the right person, you’ll likely need to provide office space, adding to the costs, and sometimes additional training. On the other hand, many of our clients have found that hiring T Mart is more cost-effective than having a full-time dispatcher. Our industry expertise, networks, and experience make us the best at what we do.
Do I have to enter into a long-term contract with T Mart?
Nope. You hire T Mart on a month-to-month basis. We don’t make trucker drivers commit long-term upfront because we believe in earning your business. If you aren’t happy, we aren’t happy, so we’ll work hard for you. But we also believe that all business owners should have the freedom to work with whomever they want. It’s important for us to keep that freedom for you.
How do I sign up with you, and what do I need?
Signing up with T Mart is easy, and you can do it all online by submitting documents. Here’s what you need:
- Sign our Dispatch Carrier Agreement: This document outlines our responsibilities and yours, ensuring clarity and protection for both parties. It’s not a long-term contract; our services are month-to-month, and there are no penalties for discontinuing.
- Provide insurance: Your insurance should list T Mart as the certificate holder, a standard practice in the industry. This allows us to do business on your behalf. Ensure the insurance covers liability and cargo.
- Complete the Carrier Set-Up Package: Include references from the shippers and brokers we’ll be working with, as well as your MC Permit and signed W9 form.
- Submit driver information: For each driver we’ll be dispatching, we need a copy of their CDL. We maintain accurate records to stay compliant with safety, regulatory, and industry requirements.
Do I have to be working under my own MC authority to hire T Mart?
We collaborate with owner-operators who operate under their own MC authorities, and we also work with carriers that have company drivers.
Will you work with me if I’m new to the business?
Absolutely! We enjoy helping truck drivers and carriers at all stages of their careers. What matters to us are drivers who are eager and hardworking? Honestly, if you’re a new carrier, it might be a bit challenging at first to get the best loads because many shippers and brokers prefer carriers with MC authorities that are more than six months to a year old. But don’t worry, Smart Trucking will put in our best effort to help you earn better money in your first year. Once you reach the one-year mark, getting better rates and loads will be even easier.
Can I choose T Mart services I want?
Absolutely! Lots of our clients really like our full-service package, which takes care of everything like dispatch, paperwork, compliance, and all the business support a carrier might need. But we also have clients who only need help with paperwork. At T Mart, we think our clients should be free to run their business the way they want. After all, they know their business better than anyone else.