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7 min read

An Honest Review of One of the Best Truck Factoring Companies


I receive several calls per week from truckers that are trying to make the decision of whether to become an owner operator or not.

Most of the time, they are wondering if they will have enough not only for a down payment on a truck, but also needing to have enough money left over to pay for fuel while they wait a month to get paid for their first hauls.

If you're thinking about starting up, or already run your own trucking company and need cash while you wait to get paid, you need to get set up with one of the best truck factoring companies so you can collect early on your accounts receivable.

What is Accounts Receivable?

Most trucking companies have what's called an accounts receivable. Accounts receivable, or "AR" is simply what somebody else owes you for goods or services already delivered.

It's very common in the transportation and freight industries for your receivables to be paid 30 to 45 days out.

The problem with waiting 30 days or more for your money is that during that time you'll have costs, including your fuel, your truck payment, insurance, and other costs.

This is why many trucking companies look into factoring their AR.

On average, it costs $1.38 per mile to run your truck, but 26% of that assumes paying a driver, so if you're a solo owner-operator, you can cut that down to $1.02. (Assuming you don't need food to eat or a place to sleep or anything like that....)

If you're waiting 30 days to get paid, and it costs you $1.02 per mile to run your truck, how much money will you be shelling out each month while you wait to get paid?

By and large, the typical trucker tells me they average around 2,500 miles per week.

This means that assuming your receivables are only for 30 days, and assuming every single invoice gets paid exactly on time, if you're a new owner operator, you're going to have to shell out more than $10,000 (not counting the down payment you need to get into the truck along with other startup costs) before you start seeing any income.

Thinking about paying for fuel is just as important as financing your truck

When someone tells me they are starting up, but they don't have a freight factoring company in place yet, I have one simple question for them:


How Can a Freight Factoring Company Help?

When you factor your freight, a freight factoring company will pay you a portion of the money you are owed (typically 90% or so) and send a new invoice to the company that owes you the money (changing the payer from your company to theirs).

How much does Freight Factoring Cost? 

In exchange for receiving the money early, your costs will be a percentage of the total invoice, typically anywhere between 1% and 5% per 30 days.

In general, if you're factoring $10,000 a month or so, you'll likely see your factoring charges in the 3% to 5% range (so, around $300+ per month in order to not have to wait around to get paid).

The impact of not waiting for your money can be huge, and in many cases, if you're a startup owner operator working on a thin budget, freight factoring can be the difference between whether your business makes it or you become just the next guy (or gal) to get their truck repossessed.

Where Should You Look for Receivables Financing?


Finding a receivables factoring company is easy.... just go onto Google and type "truck factoring" or something like that.

Want to know what's not so easy?

Finding a good receivables factoring company.

We don't get involved in factoring very often, as our specialty is really equipment financing - most good equipment finance companies don't bother with factoring for the same reason most Chinese restaurants don't serve pizza: It's hard to do more than one or two things very well.

For that reason, when someone contacts us to talk about factoring invoices, 99% of the time I just refer that business to another company.

What kind of businesses would you recommend? 

Every week, I get calls from companies looking to partner with us, from factoring companies, to commercial real estate brokers, to vendors looking to get their customers financed.

It can be hard to tell sometimes who are the good guys and who are the bad guys, because most of the bad guys are smart enough not to be obvious about the whole not being honest thing.


(I recently got a call from a commercial real estate broker who wanted to start a partnership where he could refer his customers who were looking to finance equipment.

He had a splendid idea that maybe I could charge them all a $500 application fee which we could then split. With that, we wouldn't have to worry about whether anyone would really qualify for financing or not.

After my suggestion of some unnatural acts he may wish to partake in with his family members and pets, the conversation ended abruptly).

The kind of companies we like to recommend are businesses that are totally transparent with their customers, meaning no monkey business whatsoever.

More importantly, occasionally I will come across somebody who you can just tell is out to do the right thing by their customers, and those are the types of businesses we like to put you in contact with when you need something that we can't or don't want to offer.

Our Steelhead Finance Review


When someone calls who wants invoice factoring, or who clearly needs it and just doesn't know it yet, I have recently started sending pretty much all of them to a company out of Medford, Oregon by the name of Steelhead Finance.

Full Disclosure: Pretty much all factoring companies have what is called a broker program, where you can make commissions for referring customers to them. When I first wrote this article, it was not for compensation. 

However, after this article helped them get a few customers, I received a call. Turns out they would feel bad if they never compensated Smarter Finance USA for sending business their way. 

(How cool is that?)

In the interest of transparency, I must let you know that while this article was written with no plans for compensation, Steelhead does compensate Smarter Finance USA at this time.    

A few yearss ago, I received a call from a represenative at Steelhead. He explained he was trying to help one of his customers out by helping him shop for a company to finance a semi tractor purchase.

This is much different than any other call I've gotten from a factoring company: usually the caller is some fast-talking person with stories of how much can be made by flipping all of one's customers over to them.

After getting to know them a little bit better, a few things were clear:

1. The folks at Steelhead are the "good guys" - they constantly look for ways to help their customers be successful, which is very rare in the industry.

2. They don't shy away from the fact that there are negatives to factoring your freight or other invoices, and will be upfront with you so that you can make the best decisions for your business.

I asked the folks over there to tell me about some of the drawbacks...

What are the Negatives to Factoring your Trucking Invoices?

The biggest drawback to AR factoring is that it's not a "cheap" source of funds. According to their marketing director:


"Customers with time in business and good credit or who have collateral can sometimes qualify for a business loan, which can be a less expensive source of funding. Also, if you have available room on a low interest credit card, that could be a cheaper source of capital if you pay the balance in full each month. Most business credit cards are above a 12% APR so you would want to be paying the balance each month otherwise you would be better off with factoring."


It's a shame more companies won't come out and admit that there are cheaper sources of funds, because it's important if you are going to factor to understand that it is a more expensive option, so that when less expensive options are available, you can move to them.

Let's examine factoring costs a little bit deeper.

If you own one truck, you're likely to drive about 10,000 miles per month. From the conversations I've had with my customers, the average contract right now pays around $2 per mile.

This meaning you'll be averaging around $20,000 per month in invoices.

Remember that you'll always have that $20,000 per month that you're waiting for, until you get a second truck, and then you might be waiting for $40,000 per month in payments.

Now if you have an extra $20,000 that you don't really need, there's no reason to finance. Just in case you're among the 99% of the world that doesn't just have $20k they weren't really using, let's look at the cost of factoring versus the alternatives:


Factoring costs are certainly higher than the other alternatives, but the fact is, most companies don't have $20,000 of open credit limits per truck or the ability to walk into the bank and walk out with $20,000 (not without a ski mask anyway) so the truth is factoring is often the best of the available options.

Factoring is a particularly good choice if you have limited or a poor credit history: since qualifying is based on the credit of your customers, as opposed to your own, in many cases (especially since 2008 happened) factoring is the only way to keep yourself driving your own truck instead of working for somebody.

It's important to work with companies that will be honest and transparent with you, since in the rare cases where there is a media article about invoice factoring, it's typically written by a factoring company and since reporters know nothing about factoring, they don't have the ammo to call BS on total puffery.

Why is it So Important to Be Sure You're Working With an Honest Factoring Organization?

Whether you're talking about equipment financing or invoice factoring, the business lending environment is full of frauds.

My daughter loves a movie called Matilda where Danny Devito plays a sleazy car salesman, and many of the stories I hear or people I come in contact with remind me of this scene from that movie:





Here's one factoring scam Steelhead told me about that I hadn't heard of before:


"Some disreputable factors will file a lien against your company (also known as a "UCC file statement") when you request a quote. You haven't yet signed a contract but they've made a claim against your property, meaning it will take more time and be more difficult to get quotes or a contract signed with a competing company"


Pretty scummy, right?

The other thing you should look for is a company that will be upfront with you about the terms of the contract, rather than hiding the terms in the hope you won't actually read anything.

For example, Steelhead's contracts provide 90 day exit clauses (meaning you can quit factoring at any time given 90 days notice) while some in the industry have a 12-month exit clause, meaning once you give notice that you're done with the whole factoring thing, you still have to keep factoring your invoices with them for a year.

That's fine, as long as the company points that fact out to you when you are signing the contracts, which unfortunately does not happen often enough.

Is Steelhead the Best Choice of an Invoice Factoring Company?

I can't honestly answer that for you, as in order to actually say that honestly, I'd have to have talked to every factoring company in the U.S., which I have absolutely no plans on doing.

However, what I can tell you is that I have talked to many of Steelhead's customers, and every single one of them has referred to their representative as "My friend ______."

That's rare for any company, and especially rare in an industry where a representative's name is usually put after a couple of four-letter words.

Factoring may or may not be right for your business, but these guys will tell you whether it's a good option or not, and in my book, that certainly makes them the best factoring company I've dealt with.

If you would like to consider factoring your invoices with Steelhead, give a ring to (541) 200-6275 or just click on the picture below.  


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