As a Factor for the trucking industry I have to know my business and have a very clear understanding of the value I bring to my clients. And that’s why I’m writing today to share with you the “5 reasons why Factoring is so important to Truckers” and Trucking as an industry.
Since each topic involves some explanation, and it’s important to be concise, I’m addressing one point at a time in each Newsletter. So, to begin today’s discussion of why Factoring is so important to small company truckers, we’ll start with Reason #1 – the Fuel Card.
Reason #1: The Fuel Card
The Fuel Card “levels the playing field” between Factor and Trucker. All Truckers know it costs money to factor their invoices but receiving a Fuel Card from a Factor results in significantly offsetting the total costs of factoring, making it an affordable and beneficial option. How? Let me explain:
Using national averages for calculations (rounding to simplify the numbers), and an average month driving 10,000 miles we see fuel costs and freight rate charges per mile work out to be:
Fuel card savings of $0.10 per gallon reduce the “net cost” of factoring from industry averages of 2.5% to a much lower 1.79% on a 30-day invoice – but this, only for users of the fuel cards which are provided by Factors.
It’s important to know that typical industry fuel cards can cost the Factor upwards to $5000 for a minimum purchase of 2500 cards. That is the investment the Factor makes upfront to provide you, the small trucking company client, the various benefits provided by fuel cards. No small trucker would invest $5000 to receive 2500 cards for himself, or a few other drivers, right? It makes no sense, whatsoever, and that’s where the Factor comes in. He (or she) makes that investment in order to provide you the services, benefits, and discounts the fuel card offers, but ONLY as part of becoming a factoring client. That’s the catch… and the truth behind the trade-off.
Summarizing, the 1st truth to why Factoring is so important to small trucking company clients are the reductions in factoring costs and various discounts which come as part of the fuel card the Factor offers. Stay tuned for Reason #2 – Fuel Advances.
Reason #1: Fuel Card
Reason #2: Fuel Advances
Reason #3: COD
Reason #4: Collections
Reason #5: Credit Checks – Qualify your Customers to make sure you get paid – we do the work upfront