Learning the details of owner-operator financing, ranging from a freight broker credit check through managing the freight finance to free working capital to make more moves can be troublesome at best. In today’s age, the push for faster service and lower costs is absolute. As reported by John D. Schulz of Logistics Management, strong truckload roads coupled with an increase in GDP are creating year-over-year growth opportunities for brokers and owner-operator truck carriers. Unfortunately, there are only so many trailers and trucks available, and any delay in payment for services increases the risk to these companies. Ultimately, brokers and owner-operators need a better approach to freight finance. Let’s take a look at the problem of high costs for credit, why an expert is essential to navigating the industry, how a line of credit (LOC) can help, and a few other points of consideration.
The Problem: Fees for Freight Finance Can Be Exorbitant
The simple reality comes from the issue of an owner-operator financing bad credit among its brokers or shippers. If the cargo owner doesn’t pay, the trucking company loses profitability, and even if everything is paid on time, there are still the added costs of processing. In the worst-case scenario, the trucking company may need to pursue legal options for obtaining payment, and that’s an adverse effect because it digs into the working capital of the transporter. Additionally, the fees for financing can be extreme and vary widely based on the nuances within each contract. There is clearly profitability within offering owner-operator truck financing, indicated by a growing CAGR for this industrial sector, noted in a past blog. However, there’s also another reality. Larger carriers have access to more resources to keep their freight financing costs under control, but others, including those of mid-size stature, may simply have limited resources. In a highly volatile market, even the largest carriers may experience cash flow disruptions due to the unrelenting demand on the industry. As a result, it comes down to knowing what to expect and working with the right services for finance.
Freight Financiers Must Have Expertise in the Trucking Industry
Freight financiers are a dime a dozen, but they are not created equally. These companies could charge up to 30% or more for simply offering an advance on an expected payment. Moreover and without experience in trucking, these companies cannot conceivably maintain a financing presence. In other words, freight financing depends on knowing the details of all shipments, contracts and ways to ensure shippers pay on time and in full. By the same measure, the value of a broker credit check conducted by these companies can help your team identify shippers or brokers that have a history of delayed payments. How is that valuable?
Well, the creditworthiness helps your team plan for when a realistic payment will arrive. That’s essential to maintaining a positive cash flow and leveraging commercial truck financing for owner-operators.
LOC for Commercial Truck Financing for Owner Operators
Another option in freight financing is a line of credit. This is a resource that doesn’t rely solely on invoiced transportation but rather a combination of expected payments with the ability to use funds for virtually any need. This is an excellent way to augment financial stability through periods of uncertainty, such as when your competitors undercut your rates and when the market is shipper-favorable.

Building Credit Starts With Short-Term Funding
The best way to build credit with owner-operators is to work with shippers and brokers that have a strong history of paying on time and in full. However, building credit can also begin with short-term funding solutions that consider the uniqueness of each contract and help your team maintain transportation needs through the immediate future. This ensures you are able to recoup your expenses while making a sizable profit with a faster payment window. Of course, that also depends on reviewing the fine print listed in each contract to ensure your team invoices all shipments properly. After all, an error on your end could lead to lost opportunities for profitability. And when things go awry, short-term funding can help you get over the hump.
Choose HaulPay to Finance Freight With Less Risk and Greater ROI
Today’s transportation industry is a living, complex organism, and like every animal on the planet, it requires regular energy—i.e., working capital in this metaphor—to live on and thrive. There are always going to be companies that have a poor credit rating and those that might put your livelihood at risk. However, you can offload those risks by choosing the right partner for your freight financing needs. ComFreight is that partner, and their solution, HaulPay, is exactly what you need. Request a demo to see how the HaulPay platform works. Learn more information on how to build credit as a freight broker or how commercial trucking financing for owner-operators works.