Hotshot factoring company: getting paid fast on many small invoices

A small-invoice week

One hotshot, five runs, five invoices. This is the shape of the work, and why fees per invoice matter. EXAMPLE

At a 3% fee with no extras, the week's factoring costs $113. Add a $15 transfer fee on each invoice and it becomes $188, about 5.0% of the week. One batched transfer a day, or transfers included in the rate, keeps the real cost close to the quoted one.

Minimums and fees to check

• Per-invoice minimum fee: some factors charge a set minimum dollar fee on each invoice, which hits small loads hardest.
• Transfer fees: ACH, wire or same-day charges per payment.
• Monthly minimums: a shortfall charge if you factor less than a set amount, risky in a slow month.
• Tiered fees: extra percentage when customers pay late, common with slow oilfield payers.
• Contract length: how long you are committed and what leaving costs.

Industry ranges give a starting point: one factoring company's published article puts recourse factoring at about 1.5% to 3% per invoice. Source RTS Financial doesn't publish its rate; it quotes each carrier and takes a small fee when the customer pays. Source

Who hotshot carriers invoice

• Freight brokers: most common; usually standard payment terms and established credit records.
• Equipment dealers and rental yards: steady machine moves, sometimes billed directly.
• Oilfield operators and service companies: urgent parts and equipment, often on long terms and through approval systems.
• Construction contractors: materials and small machines, sometimes with their own invoice approval steps.

Factors approve each customer on its credit. Brokers usually have long records; a small contractor may not, and the factor may decline it. Ask before you haul for a new direct customer.

Oilfield hotshot invoices

Oilfield work pays well when it is busy, but operators and service companies can take a long time to pay, and some require invoices to be approved in their own systems before payment starts. A factor can advance against those invoices once they are approved. Some factors run programs for oilfield work; RTS Financial, for example, publishes an oilfield invoice factoring program with same-day funding for sand and water haulers, rig movers and other service providers. Source See oilfield factoring.

Paperwork from the road

Hotshot runs often end at job sites, yards and rigs, not docks with a shipping office. Get a signature on the bill of lading or delivery receipt from whoever accepts the load, with a printed name and time. Photograph it on the spot. Missing signatures on small loads are the most common reason a hotshot invoice waits. RTS Financial states carriers can upload invoices in its app and get paid the same day. Source

Weight ratings and your invoices

Many hotshot rigs are rated just under 26,001 lb combined so the driver can run without a Class A CDL. Source That caps the loads you can take and keeps invoices smaller, which is one more reason per-invoice costs matter. A rig rated above the line can take heavier loads but needs a CDL, a testing program and higher costs. Price each load with the hotshot rate calculator.

Choosing a hotshot factoring company

1. Get quotes priced on your typical invoice, not a sample $5,000 one.
2. Ask for transfers included, or batched into one daily payment.
3. Avoid monthly minimums you could miss in a slow stretch.
4. Check which of your direct customers the factor approves.
5. Ask how it handles oilfield approval systems, if you work for operators.
6. Prefer month-to-month terms while your customer mix is still changing.

RTS Financial states it advances more than 90 percent of the invoice within 24 hours. Source Compare that and every other term with another quote; see factoring rates.

Urgent loads and same-day pay

Hotshot work is often urgent: a part a rig needs today, a machine a crew needs by morning. Urgent loads usually pay more, but they also come with less notice and less time to arrange fuel and paperwork. Same-day funding pairs well with that pace, because the money from today's run can fuel tomorrow's. Ask your factor for its daily cut-off time, since an invoice sent after it may not fund until the next business day.

Disputes on small loads

Job sites are hard on freight. A scratched machine, a missing fitting or a late arrival can turn into a deduction or a refused invoice. On a small invoice, one dispute can wipe out the margin on the whole run. Photograph the load when you pick it up and when you set it down, note any existing damage on the paperwork, and keep check-in times. A factor treats disputes as your responsibility, even on non-recourse terms.

Fuel and hotshot cash flow

Fuel is the biggest daily cost for most hotshots, and it is paid before the load is. A factor's fuel card can lower the price per gallon where its network covers your lanes; RTS Financial publishes fuel cards with an average saving of 45 cents per gallon at over 4,000 stations, including a self-funded option. Source Rural and oilfield routes may have fewer network stations, so check the map before relying on the discount.

Seasonal swings

Hotshot demand rises and falls with oilfield activity, construction seasons and harvest. Busy months mean more invoices and more factoring fees; slow months mean fewer invoices and, on some agreements, a shortfall charge for missing the monthly minimum. Choose terms that fit your slowest month, and use the busy months to build a cash reserve.

Keeping track of many invoices

Twenty small invoices a month are easy to lose track of. Keep a running list with the customer, amount, date funded and date paid. Match it against the factor's statement each week. That list shows which customers pay slowly, what factoring really costs you, and whether any invoice slipped through without being submitted.

Factoring only some customers

If a few customers pay within a week or two, bill them yourself and factor the slow ones. On small invoices the savings add up quickly. Keep a list of which customers are factored, and make sure each invoice shows the right place to pay. Check first that your agreement allows it; some require every invoice from a factored customer, or every invoice you issue, to go through the factor.

When a hotshot shouldn't factor

If most of your work comes from a few direct customers who pay within a week or two, factoring adds a fee without saving much time. The same goes for a carrier with a reserve that already covers a month of fuel and bills. Factoring makes the most sense when slow payers and up-front costs leave you short, which for many hotshots is true in the first year and in the busiest seasons. Revisit the decision every few months; your customer mix changes faster than most.

Whatever you decide, keep one rule: never let a slow customer's invoice decide whether the truck runs tomorrow. Cash for the next load comes first, from a reserve, a factor or a faster-paying customer.

Hotshot loads and dispatch

Small invoices make empty miles more costly: a 150-mile deadhead to a $500 load can erase it. Our hotshot dispatch plans runs that link together, negotiates every rate from your floor, and calls you before booking. Our hotshot dispatch fee is 7% of gross, with no setup fee and no minimums, and factoring is never required. See hotshot dispatch and the full guide to freight factoring.