Currently Browsing: Problems Facing Truckers

Assured Cash Payments from Freight Factoring Companies Allow Truckers to Improve and Concentrate more on Their Business’ Operation

Since the Federal Motor Carrier Safety Administration (FMCSA) ordered the implementation of the new Hours-of-Service (HOS) rules on July 1, 2013, the trucking industry has suffered major losses which included a shortfall in productivity of about 80%, the dropping out of business of smaller operators, and a shortage of about 30,000 licensed truck drivers which, according to the American Trucking Associations (ATA), will continue to increase until 2022.

The new rule’s specific effect on truck drivers is further reduction in their already small pay, while on the side of motor carriers it only made cost of operations and maintenance of their trucks much higher. On top of the problems experienced by motor carriers, there is also the frustrating situation of having to wait from 30 to 60 days before some shippers and brokers could send them the payment for jobs long done. For bigger and more stable trucking firms this waiting period might have little effect on their succeeding operations; however, for starting and rookies in the business, delayed payment can have significant effects on their next job.

Maintenance cost, delayed payment, lack of licensed drivers to make all the necessary deliveries, plus all the legal concerns that need to be accomplished – these things result to many trucking firms hiring unskilled drivers, requiring their drivers to be on the road longer than what is mandated by the FMCSA and then asking them to falsify their logs so as not to get caught, and failing to make sure that newly hired drivers are given the required training. While some truckers decide to drop out of business rather than be burdened by so many worries and get entangled in bureaucratic concerns, others try hard to find the solution that will address their financial concerns which, actually, is the root of all these and other issues.

Many saw the answer in freight factoring services, a type of business wherein a factoring firm pays truckers/trucking companies immediately for work done, saving them from waiting for delayed payments from shippers and brokers. In freight factoring, also called invoice funding, a factoring firm buys a trucking company’s/trucker’s invoices at a reduced rate. Once the purchase is made, the risk of delayed payment or of not being paid at all by brokers and shippers is already the concern of the factoring firm. The trucking company, on the other hand, can focus on its next load, using its liquidated invoices to pay for driver salary and further training, fuel, purchase of truck parts that need replacement, and other needs.

Providing drivers with their needed cash fast and straight is just one of the very beneficial services offered by some factoring firms. There are also those that offer:

  • Bookkeeping services, which take care of all the complicated and time-consuming paperwork required by various (state and federal) regulating agencies;
  • Insurance program that is customized to the specific needs of each firm;
  • Advance program, wherein truckers are given an advance payment (up to 50%) for deliveries still to be made; and,
  • Fuel card, which allows truckers to manage, control and even save money on fuel

In its FAQ website, TBS Factoring Service says that there are factoring firms that take only 24 hours (or even less if a trucking company so requests) to close an agreement with, and send payment to, a trucking company on the very day that they receive the completed application. These factoring firms also allow truckers to choose which brokers or shippers they wish to factor. While these are signs of flexibility, these also speak of a factoring firm’s stability and dependability.

There is a risk of accidents and injuries that lighter vehicles are exposed to whenever they share the road with trucks. Though the yearly number of truck accidents is definitely much lower compared to car accidents, their results are, however, much more serious – fatal, most often, actually.

But then, again, with the assured cash payment guaranteed by factoring firms, there is no way that trucking companies would look for excuses for not being able to hire more and only skilled and licensed truck drivers, make sure they are trained well, increase their take home pay, and see to it that their trucks are in good operating condition, with all essential parts (tires, brakes, etc.) perfect for a safe drive.

Read that Charlie wants to thank the Charleston personal injury lawyers of the Clawson & Staubes, LLC: Injury Group.