Industries / Trucking and logistics
Trucking and logistics: the file behind the freight.
Owner operators, small fleets and brokers. What an underwriter reads in a carrier's statements, why the stack builds the way it does in this trade, and the facilities that fit a business whose collateral rolls.
What the read looks for
4 things an underwriter reads in this trade before the application.
The bank statements are read first in every trade. In this 1, these are the 4 patterns the read is looking for, and the 4 things to have explained before you send the file.
Who pays you, and how fast
Broker payments, shipper payments and factoring company advances each leave a different mark. If receivables are already factored, the deposits are net of the factor's fee and the factor holds a lien on them; both facts shape every other facility.
Fuel, repairs and the debits before payroll
Fuel cards, maintenance and insurance are the recurring debits an underwriter reads first. A repair that emptied the account in 1 week is an anomaly to explain, not a reason to be declined.
The equipment notes
Tractor and trailer financing shows as fixed monthly debits and as liens on the units. The units themselves are the most bankable collateral a carrier has, and their age and payoff balance decide how much they can carry.
Load count and consistency
60 deposits a month from 12 brokers is a business. 3 deposits from 1 shipper is a dependency, and it is read that way.
The common position stack
Repairs and slow payers build the stack.
How the stack usually builds in this trade, and the way out of it.
A carrier waiting 45 days on a broker takes a short advance for a transmission, then a second for tires and fuel while the first is still debiting. Within 2 quarters the daily remittances outrun the settlements. The way out is a single facility that retires the positions in full at closing, secured on the equipment and the receivables the advances were never sized on.
Facilities that fit
3 structures that match the trade.
Structures, not offers. Every facility is arranged through third party lenders and is subject to their underwriting and approval. Which 1 fits is decided by the file, not by the page.
Factoring
Freight bills sold for immediate cash, sized on your customers' credit rather than your own.
Read more FacilityPosition buyout
Every advance retired in full at closing, replaced by 1 monthly payment, underwritten on the units and the receivables.
Read more FacilityTerm loans and equipment financing
Fixed monthly payments for units, a shop, or working capital, for a carrier whose statements support it.
Read moreQuestions from the trade
Answered straight.
We already factor our freight bills. Does that block a buyout?
No, but it has to be on the table from the first call. The factor holds a lien on the receivables, so a buyout lender either carves those out and underwrites on the equipment, or agrees a subordination with the factor. Send the factoring agreement with the file and it is handled in the structure rather than discovered at closing.
Can the tractors and trailers be the collateral?
Usually yes, subject to the age of the units, their condition and the balance still owed on them. A carrier with paid off units has the strongest position in the trade; a carrier with new units on notes still has equity in them once the payoff is netted.
Our statements are ugly because of 1 breakdown month. Is that fatal?
An explained anomaly is a footnote. Write the sentence, attach the repair invoice, and let the underwriter see that the other 5 months look like a business. An unexplained negative week is what gets a file declined.
Medical and dental Restaurants Construction Dealerships Manufacturing
The trade, specifically
5 things a carrier should know before signing a factoring agreement.
Freight factoring is its own market with its own vocabulary, and the differences between programs are larger than the advance rate suggests.
Quick pay is not factoring
A broker's quick pay program pays the carrier's invoice early for a fee, commonly 2% to 5%, on that broker's loads only. Factoring buys invoices from every broker and shipper you haul for, checks the broker's credit before you take the load, and funds in hours. A carrier hauling for many brokers usually pays less overall to factor than to quick pay each 1, and the credit check is worth more than the fee difference.
Recourse or non recourse, and what non recourse actually covers
Non recourse freight factoring covers the broker's insolvency, not a short pay, a claim on the load, or a dispute. Read the recourse comparison before paying the premium, and ask what happens when a broker simply does not pay at day 90.
The contract: term, notice, minimums, termination
Freight factoring agreements commonly run 6 to 12 months and auto renew, with a written notice window of 30 to 90 days before renewal and an early termination fee if you leave outside it. Monthly minimum volume fees are common. Get the term, the notice window, the termination fee and the minimum in writing on 1 page before you sign; that page decides whether you can leave.
Fuel cards and fuel advances are priced separately
A factor's fuel card discount is real and worth using; a fuel advance against a load in transit carries its own fee, commonly a flat charge plus a percentage, and a cap as a share of the linehaul. They are convenient and they are not free. Ask for the fee schedule.
New authority
A carrier under its own authority for less than 90 days can factor, because the broker's credit is what is underwritten, but many factors want the MC and DOT numbers active, insurance in place, and a few loads delivered. It is commonly the first facility available to a new carrier and it is often the right 1, provided the contract terms above are read.
General descriptions of common program terms in the freight factoring market. Every facility is arranged through third party factors and lenders and is subject to their underwriting and agreement terms, which govern.
Start with the file
A straight read within 2 business days.
Send the basics through the intake form: what the file supports, what is missing, and the next step if there is one. If we are not the right desk for it, we say so.