Every owner-operator knows that in order to grow your business, cash flow is needed. You don’t want to turn down loads, but you can not afford to put fuel in your truck for the next load if you aren’t getting paid on the previous load for 30+ days. Business halts until the check hits your account and the cycle continues. When cash flow becomes an issue, quick pay and factoring should be considered. So what is quick pay and factoring?
Here is what you need to know about the differences of quick pay and factoring:
What is Quick Pay?
Quick Pay is exactly what it sounds like. You get paid, quickly. The broker will pay within 2 to 5 days instead of holding your money for 30+ days.
Awesome, right? It is- however- each broker has their own terms for quick pay. One broker may charge you 2% and give you your money within 2 days and other brokers may charge a higher rate and might take almost a week to allocate your funds. It also needs to be noted that not every broker offers quick pay which could make choosing a broker difficult.
What is Factoring?
A factoring company will buy your invoices from you at a discount then advance you your funds within 24-hours. Just like brokers, every factoring company is different and has different rates and fees. But, unlike quick pay, factoring has more benefits than just advancing your money within a few days.
So what are the benefits?
Benefits of Invoice Factoring
Besides advancing your funds fast, invoice factoring helps you grow your business with additional benefits that include:
- Back office support- All the owner- operator is responsible for is submitting the proper paperwork. The factoring company handles all collections and invoicing.
- Time- Quick Pay can take up to 5 days usually. Factoring, for some companies, allocates funds same-day and max within 24-hours.
- Fuel Discounts- Most factoring companies offer fuel cards which gives you discounts at select fuel stations and fuel advancement options.
- Client Representatives- Factoring companies offer client portals that you can access 24/7 to view your documents and statuses. Some even give owner-operators their own client rep that can answer any questions they may have.
- Partnerships- Factoring companies have channel partnerships with insurance companies, compliance companies, dispatchers, and more available to you.
The bottom line is that inadequate cash flow can either hurt your business or you can choose to get funded faster to keep your business running. Quick pay is a good option if all you need is cash quickly and only use it every once in awhile. Invoice factoring is a great option if you want consistent cash flow with additional benefits and support to help grow your business.
Call 205.397.0934 and talk with us about invoice factoring for your business!