Factoring for trucking fleets: payroll, volume pricing and reporting for 2 to 20 trucks

The volume pricing ladder

Factoring is usually priced lower as monthly volume grows, because the work per invoice is similar whatever its size. How terms tend to change, as an EXAMPLE, not a price list:

For context, one industry article from a factoring company puts recourse factoring at about 1.5% to 3% per invoice and notes that contract pricing for steady volume is usually lower than spot pricing. Source Ask any factor at what volume your rate changes, and what happens if your volume falls in a slow season. EXAMPLE

Payroll timing

Payroll is where fleets feel broker terms the hardest. Drivers expect to be paid every week; brokers pay every 30 days or more. Without factoring, a fleet needs a month or more of payroll in the bank just to keep up. With factoring, most of each load's invoice arrives within about a day of delivery, so this week's loads pay this week's drivers.

Worked example: five trucks EXAMPLE

A five-truck reefer fleet invoices about $18,000 a week and pays drivers about $7,000 every Friday, plus fuel and insurance. Brokers pay in 35 days. Without factoring, the fleet needs about five weeks of payroll in reserve before the first broker payment, $35,000 for payroll alone before fuel and insurance. Factoring every invoice at 2.5% costs about $450 a week, and payroll is covered by the advances from the same week's deliveries. The owner decides the fee is cheaper than a line of credit large enough to cover the gap.

Reporting fleet owners should get

• Funded invoices by truck, driver and broker, so you can see which units earn what.
• Open invoices with days outstanding, so slow brokers stand out.
• Reserves waiting to be released, and when.
• Fees per invoice and per month, to track the real cost of factoring.
• Chargebacks on recourse invoices, before they are taken from advances.
• Exports your bookkeeper can use without retyping.

Collections are part of what you pay for; RTS Financial states it manages collections on factored invoices. Source The reports tell you whether that is working.

Factoring only some trucks or customers

Fleets often have a mix: a dedicated customer who pays in 15 days, and spot freight from brokers who pay in 45. Factoring follows invoices rather than trucks, so most fleets factor the slow brokers and bill fast payers directly. The advantage is lower total fees. The risk is confusion: a broker who receives an invoice from you and a notice from the factor may pay the wrong party. Keep a list of which customers are factored, and make sure everyone in the office uses it.

Drivers and paperwork

With several drivers, paperwork is the weak point. A bill of lading left in a truck for a week is an advance that doesn't arrive. Give every driver a simple rule: photograph the signed bill of lading at delivery, flat and readable, and send it before leaving the dock. Have one person check and submit invoices daily. Many factors offer driver access to their app so documents come straight from the truck.

Fuel programs for fleets

Fleet fuel cards add per-driver controls, limits on what can be bought, and reports by truck. RTS Financial publishes fuel cards with an average saving of 45 cents per gallon at over 4,000 stations, a credit line of up to $3,200 per truck per week on its Fleet One card, and a self-funded option. Source Compare discounts with where your drivers actually fuel, and set limits before handing out cards.

Mixed specialty fleets

A fleet running a car hauler, two flatbeds and a tanker has different paperwork for each rig: vehicle inspection reports for the cars, securement and tarp records for the flatbeds, wash tickets for the tanker. Each type of freight also brings different customers with different payment habits; dealers and auctions, steel mills and contractors, terminals and plants. Ask the factor whether it handles all of them, and whether any of your customers fall outside what it will buy. Factoring is priced on those customers' credit, not your own. Source

When a broker disputes a load

With more trucks come more disputes: a short delivery, a damage claim, a late arrival the broker says cost them. A disputed invoice may not be funded, or may be charged back on a recourse agreement. Settle disputes fast and in writing, with photos, signed delivery receipts and check-call records. Ask the factor how it handles partial payments, and who talks to the broker while a dispute is open, so your office and the factor don't give different answers.

Office roles

Decide who does what. One person should own factoring: checking paperwork, submitting invoices, reading statements and chasing missing documents with drivers. Someone else, often the owner, should review the factoring cost and the open invoice list every week. In a five-truck fleet that may be two people; in a twenty-truck fleet it may be a billing clerk. Without a clear owner, invoices sit, reserves go unchecked and chargebacks surprise everyone.

Building a reserve as you grow

Factoring makes growth possible, but it doesn't replace a cash reserve. Set aside part of each week's advances until you can cover at least a few weeks of payroll and fuel on your own. With a reserve, you can factor only slow payers, negotiate better terms, or stop factoring entirely, and a bad month doesn't become a crisis.

Growing from one truck to several

If you started factoring as an owner-operator, revisit the agreement when you add trucks. Your volume is higher, so your rate may be negotiable. Your needs are different too: reporting, driver access and fuel cards matter more than they did. A contract signed for one truck may not fit five. See owner-operator factoring for the starting point.

Leased-on owner-operators in your fleet

Many small fleets add trucks by leasing on owner-operators. Their loads run under your authority, so their invoices are yours to factor, and their settlements come from you. Agree in the lease how quickly you pay them after delivery, and whether any factoring cost is shared. Clear, fast settlements keep good owner-operators on your fleet, and late ones send them to the next carrier.

What to negotiate as a fleet

1. The rate at your current volume and at the next tier.
2. Transfers included, or one batched payment a day.
3. No minimum, or one you meet even in your slowest month.
4. The freedom to choose which customers to factor.
5. Reporting by truck and broker, with exports.
6. Fuel card terms for every driver.

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

Fleets, dispatch and factoring

Factoring covers the cash; dispatch covers whether every truck is loaded at a good rate. Our fleet rate is a limited-time discount for two or more trucks, and we plan loads across your units so they keep moving. Rate confirmations come straight to you, so your office holds the paperwork your factor needs, and factoring is never required to work with us. See small fleet dispatch and the full guide to freight factoring.