Freight Factoring is Cheaper Than You Think

Sean Campbell

Last Modified : Nov 20, 2024

Fact-checked by: Bruce Sayer

Whether an owner operator or a fleet owner, you need financial resources to establish, maintain, strengthen, or grow your business.

For many business owners, arranging a traditional line of credit is the first thought that comes to mind when considering their financial structure. But is bank financing always the best choice for your trucking business? Yes, bank financing can offer good interest rates, but much more must be considered when weighing the cost of borrowing.

Many trucking operators of all sizes will tell you that bank financing can be complex, time-consuming, highly restrictive, and subject to a host of additional fees – all of which impact the cost of money. To correctly calculate the cost of bank financing, one must know the loan’s annual percentage rate (APR). APR is the interest rate plus the cost of all the extra fees charged on your loan, which represents the actual yearly cost. When assessing the APR, financial restrictions, reporting requirements, and the agonizingly slow time to process the loan, truck company owners are often left with one thought – “there must be a better way to fund my business!”

The good news – there is. eCapital freight factoring is an alternative form of financing explicitly designed for transportation companies. Freight factoring is one of the most popular forms of funding for trucking companies. It provides exceedingly fast funding, highly flexible terms, is easy to manage, and – eCapital freight factoring is cheaper than you think!

An Overview of Freight Factoring and Its Benefits

eCapital freight factoring converts invoices into immediate cash, so business owners can get paid quickly—even if their clients take weeks or months to settle.

The concept is simple: a third-party factoring company buys your accounts receivables (open invoices) for their total amount, deducts a small fee, and then collects payment from the shippers and brokers who hire you.

For a trucking business, immediate payment means uninterrupted cash flow and more working capital on hand to:

• Meet fuel, payroll, and other operating costs
• Take on new loads
• Strengthen or grow the business

Why is eCapital freight factoring cheaper than you think?

Cost is just one measure of the value of a service. Functional value is what a service does – it’s the holistic solution the service provides to the customer. A well-priced service that offers little functional value provides minimum paybacks to a business. A slightly higher-cost service delivering maximum benefits can be more valuable and profit-enhancing in the long run. With this concept in mind – eCapital freight factoring is much cheaper than you think.

eCapital freight factoring is an industry-specific form of financing designed to meet the unique capital requirements of transportation companies. Availing more than just immediate access to working capital, eCapital freight factoring provides a host of cost-saving services to augment the cost of factoring and bolster the client company’s bottom line.

Cost-saving services available with eCapital freight factoring include:

• Cost-free accounts receivable management
• Free credit checks to verify a shipper’s ability to pay
• Online tools such as cost-per-mile and profit & loss calculators
• Fuel discount program
• Access to industry expertise

These cost-saving services combine to give a market advantage to owner-operators and small-to-medium-size fleets, allowing them to compete against larger carriers.

Qualification is fast and straightforward

Unfortunately, it’s not uncommon for trucking companies to struggle with outstanding invoices from slow-paying customers, have a checkered financial history, be stuck in an organizational transition, or rebound from a tough year. All these challenges may result in a weak credit rating and stagnate your cash flow. On the surface, a commercial line of credit may appear to be the less expensive funding option. Still, the conditions that cripple cash flow are often the very same conditions that disqualify the business from bank financing.

Qualification for eCapital freight factoring is based on entirely different criteria than bank financing. Banks will audit a company’s performance and credit standing to determine loan qualification. Few start-ups and small growing fleets can qualify based on these criteria. A factoring company assesses the credit strength of the trucking company’s customer base to determine qualification. If your trucking company has credit-worthy customers, your business will most likely qualify for eCapital freight factoring.

The qualification process is fast and straightforward, generally completed in a few short days. Once approved, 1st funding begins almost immediately, and ongoing funding is processed within hours of submitting invoices for financing. Speed of funding is another contributor to lowering the cost of money. The time value of money is a financial principle that states the value of a dollar today is worth more than the value of a dollar in the future. For trucking companies, same-day funding allows operations to continue uninterrupted. Delayed funding leaves a trucking company cash-poor and unable to fuel trucks, pay drivers, or meet daily financial obligations. Faster funding equates to higher functional value.

Why choose eCapital freight factoring?

Efficiency equates to enhanced profitability. eCapital freight factoring has revolutionized transportation financing by building a cutting-edge platform supported by streamlined processes and an industry-experienced team to give customers the most efficient control over their money.

eCapital freight factoring uses advanced technology, deep financial resources, and highly trained team members to provide our customers with access to more money, faster, and with more control than competitors can provide.

Instead of sending the funds to the client’s bank through ACH or wire transfers, eCapital created InstaPay—a disbursement tool that helps customers move money 24/7/365 whether the banks and clearing houses are open or not.

Imagine you’re a truck company owner at 8 pm on a Thursday, and you forgot to do payroll. With any other factoring company, you’re done—there are no options. eCapital lets you log into your eCapital online portal, choose InstaPay, and move money anytime—including holidays.

eCapital freight factoring provides truckers with even more benefits, increasing the functional value of our industry-leading factoring services:

• An extra line of credit: Additional capital above and beyond what your receivables provide.
• A commercial credit card: A pay advance plus control, flexibility, and consolidated reports for easier transaction monitoring and tax filing.
• Credit checks: Access to real-time payment trends on 50,000 shippers and brokers in North America so you can assess creditworthiness and make intelligent decisions on who you’ll work for.
• Fuel discounts: Lower fuel costs that help you save thousands monthly by using fuel cards at over 16,000 locations.
• Five-star load board: Information on high-paying loads from reputable shippers and brokers with built-in automatic credit checks.
• Administrative support: Free, world-class back-office support, handling collections and delivering real-time reports on the status of each invoice while you focus on picking and delivering loads.

eCapital freight factoring utilizes technology to put the customer in control and access more money above and beyond what they’re generating. Leveraging our technology stack to enhance efficiencies keeps our factoring rates low without diminishing the human element and relationship between our account executives and truck company owners.

Non-Recourse Factoring

A valuable option to investigate when considering eCapital freight factoring is non-recourse factoring. Unlike traditional factoring, in non-recourse factoring, the factor assumes the risk of non-payment by the original debtor. If the debtor doesn’t pay the invoice, the business is not required to repay the factor. This method allows businesses to obtain immediate liquidity without the liability of potential non-payment by their customers. Not all companies that offer non-recourse factoring cover the same liabilities. You can find some things to look out for in our blog Top 8 Things to Understand Before Signing A Non-Recourse Factoring Agreement.

Conclusion

The functional value of fast cash in the trucking industry is most important. Cash in hand enables operational efficiencies to keep trucks moving and maximize equipment utilization. eCapital freight factoring and the associated cost-saving services accompanying its use are highly cost-effective solutions to ensure regular funding.

And when you add it all up, eCapital freight factoring may be much cheaper than you think.

Key Takeaways

• Freight factoring provides exceedingly fast funding, highly flexible terms, and is easy to manage. eCapital freight factoring is cheaper than you think!
• Availing more than just immediate access to working capital, eCapital freight factoring provides a host of efficiencies and cost-saving services to augment the cost of factoring and bolster the company’s bottom line.
• A valuable option to consider when investigating eCapital freight factoring is non-recourse factoring.

Sean Campbell

Sean Campbell, Business Development Officer, has over 15 years of experience in providing alternative finance solutions to businesses, with a focus on supporting clients in the transportation industry.

Prior to joining eCapital, Sean held business development positions at Crestmark Bank, now Pathward, and Bibby Financial Services North America, which was acquired by eCapital in 2020. Fueled by a trusted network of industry partners and unmatched expertise, Sean has helped transportation companies across the U.S. secure hundreds of millions in funding.

Sean earned his Bachelor of Science degree in Business Administration from Henderson State University.