Hot Shot Factoring – Frequently Asked Questions
Hotshot trucking is a category of trucking that involves hauling time-sensitive loads. Hotshot truckers typically use a midsize pickup truck with a detachable trailer. Carriers haul smaller freight to a local or regional destination for a single customer. Hotshot truckers must have an Operating Authority (MC number) in addition to a DOT number
Freight factoring, also known as transportation factoring or truck factoring, is the process of selling your outstanding freight bills (accounts receivable) to a factoring company for a cash advance.
The process of hotshot factoring is simple:
1. Tell us what your hot shot hauling needs are.
2. We match you with a freight factoring company who best fits your needs.
3. The factoring company takes you through a quick approval process.
4. Haul and deliver the hotshot load as usual.
5. Submit a copy of freight bill(s) to factor.
6. Receive your cash advance within 24 hours.
The transportation factoring process is far more simple and much faster than traditional financing. The initial paperwork process is easy and generally only takes 3-5 days for approval. After that, you can get paid for factored freight bills in as little as 24 hours.
No, with our freight factoring programs, the client has choice to only factor the invoices you wish to.
There are two types of factoring that hotshot truckers can choose from, recourse and non-recourse. In a recourse factoring agreement, your trucking company is responsible for payment of the invoices that are not paid by your customers after a period of time. In a non-recourse factoring agreement, the factoring company assumes the risk of non-payment if your customer fails to pay the outstanding invoices. If you don’t want to take on the risk of liability, non-recourse hot shot factoring may be your best option.
There is no “one size fits all” way of calculating factoring cost. Factoring rates are calculated based on a number of factors including the volume of the monthly receivables you wish to factor, the creditworthiness of your customers and the length of time it takes your customers to pay. Learn more here.
Factoring is a great way to maintain a healthy cashflow for your trucking business. While hot shot hauling has its advantages, the business itself can be unpredictable. Having to wait 30-60 days to be paid by the customer can prevent a trucker from being able to haul the next load.
With the working capital from invoice factoring your hotshot trucking company can haul more profitable loads, hire more drivers, pay for maintenance and repairs and have cash for whatever else you need. Freight factoring also leaves hot shot haulers debt free.
No, freight factoring for hotshot hauling is not a loan. Loans add debt to your books. You borrow money from a bank/lender you are expected to pay back with a typically high interest rate. With invoice factoring, you aren’t occurring debt your selling valuable assets. Loan approval is based on the credit of the borrower vs freight factoring which is based on the credit history of your customer. If you are denied for a bank loan, freight factoring could be your big break to get paid.
Yes, you can still qualify with poor credit. The eligibility for freight factoring is based on the credit worthiness of your customer, not you. This is because the customer is the one who is responsible for invoice payments. In fact, freight factoring can help improve your credit score by giving you the cash flow to pay off debt.
EZ Freight does not have any requirements involving the length of business operation. Startup auto hauler companies are welcomed. In order to be qualified for truck factoring, your company needs to have unpaid invoices.
Yes, startups are eligible for hot shot factoring. As long as you have outstanding invoices, you can qualify for factoring.
No, with freight factoring auto haulers are not locked into long-term contracts. If you want to get out, you’ll need to give the factoring company a noticed based on their terms.
Money is typically sent directly into your account electronically by bank wire or ACH. Direct deposit and wire transfer provide immediate cash. Clients can request to have funds sent directly to fuel card accounts.