Industry specialists say recent wage increases for drivers have small and midsize trucking companies looking for new funding solutions to close gaps caused by slow-paying clients.
HOUSTON, September 16, 2021 – Leading factoring company Charter Capital says new challenges are on the horizon for small and midsize trucking companies. The industry, historically known for slow incoming payments and driver shortages, began boosting driver wages in recent months to attract more drivers. While the tactic helps trucking companies attract new employees and keep freight moving, it’s adding to the cash flow crunch owners have been feeling for years. “QuickPay vs Factoring: What’s the Difference?” addresses two unique solutions and is now live on charcap.com.
Joel Rosenthal, Co-founder and Executive Manager at Charter Capital, says the change is hitting small and midsized trucking companies the hardest, as they typically have the tightest margins to begin with. However, as the burden of wage increases shift to brokers and shippers, payments that are even slower than normal trickle down to owner-operators too.
“It’s a widespread problem that’s been increasing,” Rosenthal explains. “Our company got its start helping trucking companies solve these fundamental issues; speeding up cash flow to ensure businesses can stay on the road and remain competitive. Payroll increases are vital to remaining in business today, but they’re adding to the burden and trucking companies are looking for relief.”
Rosenthal says that both QuickPay and factoring may be appropriate solutions depending on the situation. Plus, they work for businesses that may not qualify for traditional lending options and don’t involve taking on debt. However, they’re fundamentally different programs, so it’s essential that truckers familiarize themselves with both before choosing.
Quickpay, for example, is a cash flow accelerant that some brokers offer. It’s like a cash advance. Freight factoring, on the other hand, is offered by third-party factoring companies. The factoring company purchases the freight bill or invoice.
“When a broker offers QuickPay to a trucking business, it’s often processed on the back end through a company like Charter Capital,” says Rosenthal. “It’s good for all parties in the sense that nobody is waiting on payments, but owner-operators and smaller trucking companies will generally get more favorable terms working directly with the factoring company.”
In addition to better terms, Rosenthal says working with a factor over choosing QuickPay can give owners more negotiating power and greater freedom to choose loads, as they’re no longer tied down to brokers who offer QuickPay. Those interested in factoring or learning more can start with a free rate quote at charcap.com, or call toll free 1-877-960-1818 for more information.