QuickPay vs Factoring: What’s the Difference?

QuickPay vs Factoring Differences

Creating consistent cash flow as a carrier isn’t easy. You know the drill. You move a load, pay for fuel, cover upkeep, and more. The expenses add up while you’re driving, and it might take a few days before you even get around to sending an invoice. Then, you’re stuck waiting 30, 60, or 90+ days to have your invoice paid. It’s tough.

At some point, most carriers start looking for a bank loan or alternate ways to get load payments faster. That’s when freight factoring and quickpay come up. But, what are they, and how can you tell which is right for you?

Full disclosure, we offer both options at Charter Capital, but that also means we don’t have any skin in the game. All that matters to us is that you find a solution that works for you. We’ll give you a breakdown of both below. 

What is QuickPay in Trucking?

Quickpay is a cash flow accelerant that some brokers offer. Instead of waiting for payment, the broker provides cash advances to carriers in exchange for a discount. The discount amount varies and is usually somewhere between one and five percent of the full invoice amount. The timeframe may also vary. Some brokers will do same-day funding, and others will take several days to a week or more to pay you.

It’s worth noting that many brokers struggle with cash flow issues too. They’re stuck waiting for shippers to pay and need to get your invoices covered at the same time. This is where Charter Capital’s quickpay services come in. We offer factoring services for freight brokers and can quickpay their carriers.

Benefits of Quickpay

  • Speeds up your cash flow.

Drawbacks of Quickpay

  • Not all brokers offer it, so if you rely on it, you might wind up accepting low-paying loads to ensure you can work with a broker who does.
  • The percentage fee will vary, which may make it hard to predict expenses.
  • The fees can add up, cutting into your income.
  • The broker knows you’re tight on cash and may try to negotiate for lower rates.

How Does Invoice Factoring Work?

Recourse and non-recourse factoring are cash flow accelerants that factoring companies offer. This is a one-on-one relationship in which the factoring company purchases your invoice at a slight discount, provides you with immediate payment, and then collects payment from the broker. Like quickpay, the rate varies anywhere from about one to five percent of the value of the invoice. You can also generally choose between getting paid right away or waiting a few days.

With non-recourse factoring, you won’t be on the hook for paying the balance back if the broker doesn’t pay. With recourse factoring, you could be. However, this is rare because factoring companies perform credit checks on the brokers to determine their creditworthiness before an invoice is accepted. If a particular broker’s invoices don’t qualify, it’s likely because their ability to pay is in question. That helps you weed out potential non-payers too.

Benefits of Factoring

  • Speeds up your cash flow.
  • Can potentially work with every broker you move loads for.
  • Allows you to choose which invoices you get advances on.
  • Relieves you of managing your accounts receivables.
  • Helps you gauge the creditworthiness of brokers.
  • May come with perks like fuel cards.

Drawbacks of Factoring

  • Is generally slightly more expensive than quickpay due to the additional services provided, but you can shop around for a good rate.

Charter Capital Offers Additional Benefits

If you’re considering factoring, Charter Capital can help you even more. We offer:

  • The highest advance rates in the industry.
  • No application fee or hidden fees.
  • A streamlined application process with fast approval.
  • Dedicated account managers who care about your success.
  • Comprehensive reporting.

Get a Complimentary Quote

Quickpay is a good option when you need fast payment after a load, but if your broker doesn’t offer it, you appreciate the additional benefits associated with factoring, or you want to see if you can get a lower rate by factoring, you owe it to yourself to find out more. Get started with a complimentary quote from Charter Capital.

Co-founder and Executive Manager at Charter Capital with a history of 28 years working in the financial services industry. Skilled in Cash Flow, Leveraged Finance, Factoring, Mergers & Acquisitions (M&A), and Structured Finance. Strong business development professional with BA from The University of Texas at Austin and MBA of International Business from University of South Carolina.