Quick Pay vs. Freight Factoring

Last Updated October 23, 2024

For trucking companies, few things are more important than ensuring you get paid in a timely manner. Maintaining sufficient cash flow for your operations is key for staying cash flow positive.

But the trucking industry is one of slim margins. Even the most well-prepared, successful trucking business owners will have periods of negative cash flow or insufficient working capital. When this happens, two good options to consider are freight factoring and Quick Pay.

Let’s take a look at Quick Pay vs. factoring so you can better understand which option could be best for your trucking business.

What Is Quick Pay in Trucking?

Quick Pay for truckers is a payment option that many brokers within the transportation industry offer. Essentially, Quick Pay provides faster invoice fulfillment for a delivered load in exchange for a processing fee (which is usually 1-5% of the load rate).

Quick Pay brokers require several forms of paperwork before payment can be processed, including the bill of lading, invoice, and any other load documents. After the paperwork is submitted, it typically takes brokers anywhere from two days to one week to deliver payment.

Generally speaking, Quick Pay trucking payments allow carriers to be paid much faster than they would based on typical invoice payment terms (such as Net 30 or Net 60 terms).

This can prove to be a big advantage for managing your cash flow. However, payment times and processing fees can vary significantly from broker to broker when using Quick Pay for carriers. Additionally, each broker will only do Quick Pay for their own loads, which can increase your paperwork and complicate collecting payments.

What Is Freight Factoring?

Freight factoring is a system in which a trucking company sells its unpaid invoices to a third-party factoring company. The freight factoring company provides a cash advance for the invoices with the invoice value typically delivered in just 24 to 48 hours.

Similar to Quick Pay, trucking carriers submit their invoices to a third-party (the freight factoring company), who then immediately advances up to 99% of the full invoice value. The freight factoring company will then follow up with the broker or client to ensure the invoice gets paid.

After invoice payment is submitted to the factoring company, the carrier receives the remainder of the invoice payment, minus the factoring service fee. Average trucking factoring rates typically range between 1-5%.

There are many benefits of freight factoring in addition to the cash flow improvements, such as having an account manager support your invoice collection process, saving you time on back-end. Freight factoring is also incredibly flexible — you can factor as many or as few invoices as you want, even with multiple brokers involved.

Quick Pay vs. Freight Factoring

Here’s a quick breakdown of Quick Pay vs. factoring:

Quick Pay	Freight Factoring
Brokers only offer Quick Pay for their own loads	Freight factoring agencies can factor any invoice from any broker or customer
Payments are made directly from the broker; trucking companies must keep track of invoices	The freight factoring company provides an advance based on the value of an unpaid invoice; they then collect the invoice payment from the client
Fees are usually 1-5% of the load rate	Fees are usually 1-5% of the load rate
Payments available in two to seven days	Payments typically available in one to two business days
Need to manage payments with multiple brokers when you want to use Quick Pay	Can work with one freight factoring partner for all your invoices
Not a loan — your invoice is paid by the broker, minus Quick Pay processing fees	You could be responsible for repayment if the client never fills the invoice

Should I Use Quick Pay or Freight Factoring?

Getting the cash you need quickly can ensure that you are able to pay drivers on time, manage other operating expenses, take on new customers, run more lanes, and even improve your credit score. Most importantly, these payment options can help you access needed capital while still maintaining equity in your business, since you won’t be taking out a loan or selling equity.

So, how does Quick Pay vs. freight factoring balance out in the end?

When you need fast cash, streamlined paperwork, and payment flexibility, freight factoring is generally going to be the better choice. You’ll get paid faster, and you can pick and choose which invoices you want to factor, all with a single provider.

Quick Pay for truckers involves getting a prompt payment from a broker. If you have a great relationship with a particular broker, this option can be a good choice. However, not only do payments take longer, but you need to set up Quick Pay on a case-by-case basis with each broker you work with. Remember, brokers can only offer Quick Pay for their own loads. With factoring, you can factor invoices from any broker or customer.

Ready To Start Freight Factoring?

If you’re ready to start factoring or simply want to learn more about the process, fill out our free freight factoring quote form or give us a call today at 205-590-9471. Our representatives would be happy to discuss how altLINE can help improve your cash flow.