FACTORING vs. QUICK PAY
In the trucking industry, it’s normal to wait 5 – 7 weeks to get paid. And this doesn’t take into account that it may take you a few days, or even a week, before you have time to stop and send an invoice. Meanwhile, your cash is going out the door every day for things like fuel, tires, repairs and maintenance, etc. and the list goes on and on.
Most carriers need a much faster cash flow in order to survive. So, what are your options? Most often, it could be a choice between Quick Pay and Factoring.
What Is Quick Pay?
Some brokers offer quick pay on their loads. “Quick pay” is when a broker pays you quickly for an invoice (usually within a couple of days) in exchange for a fee. Getting paid within a couple of days is much better than waiting 5 – 7 weeks.
Of course, brokers only offer quick pay options on their own loads and not all brokers have a quick pay option in place. If you happen to find a better load somewhere else, you might have to wait a few weeks to get paid. If you can’t wait that long, you may have to pass on the better paying load and take a not-so-good load from a different broker that offers quick pay. Another downside to quick pays is you’ll have to manage and monitor all of the quick pays that you’re due. This can get quite time consuming as you’ll likely be working with several different brokers each week/month. Who has time for that?
What Is Factoring?
“Factoring” refers to selling a freight invoice at a discount to a factoring company. In return, you typically get paid within 24 hours. With factoring you can work for many different brokers while getting all of your payments from just one company.
The “discounts” associated with factoring are usually very competitive to brokers’ quick pay fees, and your pay time is often a day or two faster. As info, many factoring companies can offer same day pay. Another benefit to the factoring process vs. quick pay is you can submit multiple invoices at one time to the factor. You might find this to be pretty convenient.
Many factoring companies also offer additional benefits. For example, fuel cards and fuel discounts are often available and can help offset factoring companies’ fees. And most factors offer unlimited credit checks for free too.
Which Is Best?
This is for you to decide. We could be a little biased but in the long term we think you would find that using a factor will get your paid quicker . . . and more easily.
We hope this information is helpful to you! Please call us at (256) 737-8788 whenever we can be of assistance.