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How to qualify for invoice factoring

If you’re a trucking company owner, you know how important it is to get paid on time. But what do you do when your customers don’t pay right away? You can’t wait 30, 60 or 90 days for payment of the invoice amount. Factoring could be the answer over a traditional business loan. If your business is set up for you to legally operate, you qualify for invoice factoring. But the specifics of your business may play a role in the factoring rate or factoring fee level you are able to get.

What is invoice factoring? 

Invoice factoring providers can get you cash flow upfront, offering flexibility for your business needs. This allows you to convert outstanding invoices into fast cash and free up working capital in your bank account with a cash advance on the invoice value. It’s perfect for businesses with positive growth on the horizon whose customers lack immediate payment capabilities. And you don’t have to deal with lengthy loan applications or lengthy timelines. With invoice factoring services, the entire process can be completed in a matter of days. 

Plus, it’s a secure solution with fast access to working capital without creating debt. Make your business profitable by replacing old receivables with liquidity and moving from feeling stuck to being successful today.

How does invoice factoring work? 

Invoice factoring is a simple yet effective business financing tool available to businesses. It allows companies access to funds otherwise tied up in unpaid invoices. Also, it provides immediate cash flow without increasing debt. 

With receivable financing options like factoring, a business partner receives the company’s unpaid invoices and advances a percentage of their value. The partner then collects the invoice payments from the customer. This gives businesses the ability to maintain current operations while they wait for customers to pay instead of constantly relying on loans or other costly solutions. 

Factoring can open up new opportunities, like expanding into new markets or taking advantage of supplier discounts because of higher-quantity orders. At the same time, it can improve the bottom line through better cash flow and liquidity. 

Advantages of invoice factoring

Invoice factoring offers improved cash flow, as businesses can receive immediate payment for outstanding invoices. It does not create new debt — businesses sell their invoices to a factor rather than taking out a loan. Agreements can be tailored to a business’s needs, with different terms and options available. Factoring companies typically handle the collections process, providing businesses with credit protection.

Advantages of invoice factoring include: 

  •  Ability to get paid fast
  •  Cash flow to keep your business moving
  •  Back office accounts payable collections and billing support 
  •  Industry partnerships and discounts
  •  Free credit checks on your customers

7 tips to qualify for invoice factoring

Take a look at how your company can get hooked up with a great factoring company.

1) Attract commercial or government clients

Commercial and government clients rarely pay immediately for services. Often businesses of this nature operate with pay terms allowing for payment within 30, 60 or 90 days. For most small-business owners this can be a hard period of time to float those finances while maintaining operations. Factoring can help get you paid right away. 

2) Take on creditworthy customers

Factoring companies don’t want to factor invoices issued to companies who habitually default on their payments. To avoid the risk of a prolonged collections process, they’ll sometimes run credit checks on your customers.

3) Complete your application thoroughly

Your factoring application should include all the important information about your company. The factoring company will then be able to make a proper decision about doing business with you. 

4) Clear up liens or encumbrances

Factoring companies and many others in the financial industry will place a lien on your company to protect their interests in the agreement. For this reason, a factoring company may not want other liens in place that potentially affect their lien holding top priority. 

5) Make sure everything’s in order

Your business should be in good standing and legally allowed to operate. If your business has hit some trouble, you may have a hard time finding a factoring company. Once you’re able to straighten matters out, securing a partner will be easier.

6) Consider your personal background

To determine a deal’s level of risk, a factoring company will often run a personal background check on you and any other owners. Anything that suggests an elevated financial risk in doing business with you could affect a factoring company working with you. 

7) Organize all relevant documentation

In addition to application information, the factoring company may request other details to make a proper decision. This could include your business tax ID number, government issued ID, articles of incorporation, accounts receivable aging report and payroll tax information.

You can get a factoring service for your trucking company

If you are set up and legally allowed to haul loads, you can get a factoring company to help get you paid fast. Make sure you choose a factoring company that offers good service and has trucking industry knowledge and connections to provide additional benefits and empower your company to grow. Choosing a larger factoring company has benefits like the speed of advances, mobile technology and peace of mind that they will not lack capital to fund clients.  


What is necessary for an invoice to be eligible for factoring?

For an invoice to be factored, the load needs to have been successfully completed, and you must have the appropriate paperwork for the load itself.

Do you have to have good credit to use a factoring company?

Not necessarily. More emphasis is placed on company details and the level of risk associated with your business and/or criminal history. 

Who may need factoring services?

Any business that gets paid on net 30-, 60- or 90-day pay terms is a good candidate for a factoring service.

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TAFS is More than Freight Factoring

As one of the industry leaders, TAFS assists trucking companies to increase cash flow with some of the lowest factoring rates in the industry and a 1-hour advance option.