Truck Repair Financing Using Freight Bill Factoring

One of the main challenges for a transportation company, especially a small one, is dealing with truck breakdowns. Breakdowns can happen unexpectedly and not only throw off your load delivery schedule, but they can also impact your finances – especially if the repair cost is high.

This problem can wreak havoc on owner operators and small fleets that don’t have the money to pay for repairs. Obviously, if you have the money, your best alternative is to pay for repairs and get your truck back on the road. The problem is that most small companies can’t always afford high-cost repairs. As a result, they need to use semi truck repair financing.

Is a repair loan the solution?

One way to solve this problem is to use a truck repair loan. These solutions usually finance the cost of your repairs using your truck as collateral. This approach can solve your problem as long as your truck and equipment are not tied by another loan or finance company. Basically, they use the equity of your semi truck as collateral for the repair.

Fix the problem with factoring

But what if you can’t get a loan? What if your semi truck does not have much equity left? Another way to finance commercial truck repairs is to use freight bill factoring. This method can work if you have money tied in slow-paying freight bills. This problem is common for small truck fleets and owner-operators who work with clients that don’t offer quick-pays. This payment delay forces you to wait 30, 45, or even 60 days to get paid. Few commercial carriers can afford to wait that long for payment – especially if they have to pay a large repair bill.

How does factoring work?

The transaction is relatively simple. You sell/finance your slow-paying bills through a freight factoring company, who provides you with immediate money that you can use to pay for repairs or other business expenses. The transaction concludes once your customer pays the bill in full, on their usual schedule.

Most transactions are financed in two installments. The first installment is sent to your account or fuel card as soon as the loads are delivered and the paperwork is completed. This installment usually covers 90% of the gross value of the bill, though it can be higher. The second installment, the remaining 10%, is rebated to your account once your client pays the invoice. The finance fee is is subtracted from this installment.

Benefits

Using a receivables financing line has a number of benefits over other solutions. The most important benefit is that you get immediate working capital to pay for repairs and other important business expenses. Also, you can use the line to grow your trucking company because you’ll be able to take on new clients, even if they don’t offer fast payments. Factoring improves your cash flow by reducing the number of days you must wait to get paid.

Many carriers factor some of their receivables often, which provides them with regular working capital.

Is factoring right for you?

Factoring can help you if your main problem is that you can’t pay for business expenses because your shippers are paying slowly. It’s easy to qualify for a line as long as:

  • Your shippers/clients have good commercial credit
  • Your invoices are free of encumbrances

Most owner-operators and small carrier fleets can meet this criteria, making factoring an accessible alternative for owners who need to finance their truck repairs.

Get more information

Do you have a truck down and need money to pay for repairs? We are a leading factoring company in Canada and can provide you with competitive financing. For information, get an online quote or call (877) 300 3258.