Factoring for Hot Shot Trucking FAQ

Hot Shot truckers answer the call when time is of the essence, but what happens when clients aren’t so quick with delivering your payment?  Hot shot trucking factoring can help solve that problem.  Read this guide to learn the basics of invoice factoring and fill out this form  or give us a call to start factoring today!

Hot Shot Factoring – Frequently Asked Questions

What is hot shot trucking?

Hot shot trucking is a category of trucking that involves smaller, time-sensitive loads.  Hot shot truckers typically use a midsize pickup truck with a detachable trailer to haul freight to a local or regional destination.  To legally operate, hot shot truckers must have an Operating Authority (MC number) in addition to a DOT number.

What is freight factoring for hot shot trucking?

Freight factoring allows hot shot truckers to sell their outstanding invoices for loads hauled in order to get cash quickly. Through invoice factoring, a company has access to their money immediately instead of waiting 30 days or more for customer payment.

What are the benefits of freight factoring for hot shot haulers?

Invoice factoring is a great way to maintain a healthy cash flow for your trucking business.  With factoring, your business won’t have to wait the typical 30-60 days for payment to fund your next load. 
The working capital provided by factoring will allow your hot shot trucking company to haul more loads, hire more drivers, pay for maintenance and have cash available for whatever opportunities or challenges your business faces.  Freight factoring can do all this while keeping your business debt free.

What is the freight factoring process for hot shot truckers?

The process of hot shot factoring is simple:
1. Tell us about your business by either calling us or filling out this form.
2. We’ll match you with a freight factoring company who best fits those needs.
3. The factoring company takes you through a quick approval process.
4. Haul and deliver the hot shot load as usual.
5. Submit a copy of the freight bill(s) to the factor.
6. Receive your cash advance within 24 hours.
7. Once paid in full, your business will receive the remaining reserve minus a small factoring fee.

How long does it take to get paid with freight factoring?

Unlike traditional financing, freight factoring is fast and simple.  After completing the initial paperwork, it only takes around 3-5 days to get approval.  After that, you can get paid for factored invoices in as little as 24 hours.

How much does invoice factoring cost?

There is no “one size fits all” way to determine freight factoring cost.  Rates are calculated based on several factors, such as:
·         Volume of monthly invoices you wish to factor
·         Creditworthiness of your customers
·         Length of time it takes your customers to pay
You can learn more about factoring costs here.

Do I have to factor all of my freight bills?

No. With our freight factoring programs you are free to factor only the invoices you choose.

Are there different types of factoring for hot shot trucking?

In general, there are two types of factoring: recourse and non-recourse. In a recourse factoring agreement, your trucking company is responsible for invoice payments if your customer doesn’t pay in the agreed period of time. 
In a non-recourse factoring agreement, the factoring company assumes the risk of non-payment from your customer.  If you don’t want to take the risk of liability, non-recourse hot shot factoring may be your best choice.

Is freight factoring a loan?

No, freight factoring for hot shot hauling is not a loan. Loans add debt to your books. When borrowing money from a bank/lender, you are expected to pay back with a typically high interest rate. With invoice factoring you aren’t incurring debt; you’re selling unpaid invoices. Typical loan approval is based on the credit of you, the borrower, whereas freight factoring looks at the credit history of your customer. If you have been denied a bank loan, freight factoring could be a great way to get paid.

Can I qualify for hot shot factoring with bad credit?

Absolutely. Because factoring relies on your customer paying their invoice, eligibility for freight factoring is based on the credit history of your customer, not you. Freight factoring can even help you improve your poor credit by providing cash to pay off debt.

How long do I have to be in business to qualify?

Most factors don’t have any requirements regarding the length of business operation. To qualify, your hot shot trucking business just needs to have unpaid invoices to factor.

Are startup hot shot trucking companies eligible for freight factoring?

Yes, even startups are eligible to factor. As long as you have outstanding invoices, you can qualify for factoring.

Will I be locked into a long-term contract?

No. With freight factoring, hot shot haulers are not locked into long-term contracts. To end your arrangement, just give your factor the required notice based on the terms of your agreement and you’re free to go.

How is the money sent to me?

Money is typically sent directly into your account electronically by bank wire or ACH. Direct deposit and wire transfer provide immediate cash. You can even request to have funds sent directly to fuel card account for convenience.

How do I get started?

To start the freight factoring process, fill out our quick online application or give us a call. Simply answer a few questions and we’ll match you with a freight factoring company that best fits your hot shot trucking business’ needs.