Hi everyone,
I am not a trucker but I am very interested in load factoring and a possible alternative that we may have come up with. I’d love any feedback to see if we’re headed down the right track.
I have worked in logistics in the past but only used factoring on the international side of things (boats!). My understanding is that 2-4% of the invoice is given up in exchange for a faster payout to help cash flow management. Makes sense, but is expensive.
Why isn’t there a better way to handle this?
The solution we came up with was a credit card / line of credit that could be used to float expenses while waiting for payments to come in. The card / credit line would be **free** if paid by the due date (30 day billing cycle + 25 days to pay, so 55 days total from day 1 purchase).
If its not paid in full, then the unpaid portion would accrue interest at a rate similar to a credit card (19-29% Annual Rate) which would still be cheaper than factoring if you are paying more than 2.5% each month.
The catch would be that the credit card would be secured to the truck, think of it like a truck equity line of credit, in order to provide better access and not rely on something like FICO.
For full disclosure, we make money on interchange, which is the fee the merchant (gas station, mechanic, etc.) pays to process credit cards. This is how we make it free to the driver/operator.
The reason we came up with this idea is that our [company](https://www.yendo.com) does this type of card for consumers secured by vehicles. We offer a prime rate credit card for those wouldn’t typically qualify and are focused on eliminating payday and title loans. We’ve had hundreds of truck drivers apply trying to use their trucks to secure a card over the last few months and its gotten us very interested in exploring this space.
Thanks for your time and if you’re interested in being one of our early users please let me know!
