Staggered Payments in the Trucking Industry: Theory Vs. Reality

Staggered payments have been baked into the trucking industry since its inception. Staggered payments are a common business practice, and a courtesy extended to clients who need freight services. However, how things look on paper and how they work in reality are two very different things.

Staggered Payments in Theory

The idea behind staggered payments is designed to benefit both trucking companies and clients alike. When a client places an order with or signs a contract with a trucking company, invoices are generated. On each invoice is a date by which payment is due—usually 30, 60, or 90 days.

This gives clients time to accumulate the funds needed to pay off the balance owed and allows for large or unexpected orders that otherwise couldn’t be handled with the funds immediately on hand. For trucking companies, payments are supposed to create a constant stream of revenue that can be used to cover overhead and promote growth. That is the theory, anyway.

Staggered Payments in Reality

In reality, the waiting period for client payments can strain the finances of trucking companies. Staggered payment schedules and the influx of client orders can sync up in such a way that trucking companies can actually lose money in a given revenue cycle.

Waiting a month or longer for payments strains cash flow, while expenses such as payroll, utilities, loan installments, maintenance, and more need to be met. In an age where commerce takes place with the click of a mouse, trucking companies need a solution that is faster than the old 30 to 90-day schedule.

Eliminating Staggered Payments

Freight factoring eliminates staggered payments by converting receivables into cash within 24 hours. This results in faster access to capital, improved cash flow, and the ability to cover expenses while making plans for growth.

Express Freight Finance is the trucking industry’s leader in freight factoring. Our process is simple, transparent, fast, and can be done electronically via smartphone. We also provide a host of account management tools, including credit checks on your clients. Contact the team at Express Freight Finance today and make payments a thing of the past.