Is the Broker Quick Pay Dead?
Trucking companies are under more pressure than ever to move goods and supplies these days.
The added pressure is due to a few factors, including elevated gas prices, inflation, and heightened consumer expectations for fast delivery. While these factors normally result in elevated freight rates, the trucking market is softening.
With all the extra challenges it is crucial for trucking companies to run efficiently and to get paid quickly, resulting in more carriers opting for broker quick pay services to secure their cashflow faster.
But can broker quick pay services really pay faster and offer greater value to trucking companies than freight factoring?
Before you sign up with a quick pay broker, we want to make sure you understand all the drawbacks and risks involved – so in this post, we divulge all.
Before we dive in, be sure to watch our video on quick pay below:
Now, let’s get started!
What is quick pay?
Quick pay is a service offered by freight brokers that allows carriers and trucking companies to get paid for their delivered loads. However, despite its name, quick pay does not actually pay faster than a freight factoring company does. Whereas the trucking company gets paid within 24 hours of delivery with freight factoring, quick pay can take anywhere from 2 to 7 business days to pay out.
Granted, getting paid in a week is better than having to wait a month, but still – when time is money you definitely don’t want to have to WAIT to get paid!
Enjoy BOLT Instant Funding when you Factor with OTR Solutions.
Who are the characters involved in freight transactions?
Before we move further regarding quick pay, we want to take a moment to explore the various entities that dance around in the trucking arena – everyone who plays a role in making sure goods get from Point A to Point B. So, here is your official freight glossary. There may or may not be a pop quiz later:
Freight Broker – The middleman between the shippers and the carriers. The freight broker is responsible for making sure that the handoff of goods goes well between the shippers and carriers and that it all arrives safely and on schedule. This would be your quick pay guy. However, freight brokers may also use a factoring company, too.
Factoring Company – OTR Solutions is a factoring company who provides expedited cash flow and back office billing and collecting services exclusively for the trucking industry. We factor freight invoices after delivery, paying the carrier in less than 24 hours with BOLT instant payments and invoicing their customer (broker) shortly after in return for a small factoring fee. The factoring fee is deducted from the invoice amount, meaning the fee is deducted when you are paid and requires nothing out of pocket.
Our service enables businesses to release cash to the carriers by purchasing their invoices at a discount. We have many solutions for freight carriers.
Contact us for more info.
Shipper – Also sometimes called the consignor, the shipper is the company that owns the goods and supplies being shipped.
Carrier – This is the trucking company that transports the goods and supplies. At times called the shipping carrier, the carrier is the person or company that transports the freight and is responsible for any loss of the goods during the transportation.
Recipient – The customer. The one who receives the delivery. Also referred to as a consignee.
Trucker – Often synonymous with “carrier,” the trucker is behind the wheel. You know, the one who sacrifices home life to be on the road, keeping our country and our economy running. In fact, it’s widely known that if truckers across the nation went on strike, our country would come to a screeching halt after just three days of non-movement of freight.
Then, after just 24 hours of freight stopping, hospitals would run out of supplies, mail delivery would stop, food shortages would begin to develop and gasoline at the pumps would dry up. So next time you see a trucker, thank them for their service.
What happens during a quick pay deal?
Now that you know who’s all involved in these deals, let’s head back to learning about quick pay. During a request for quick pay, the carrier is to submit their invoice to the broker for review and acceptance, or possibly even rejection. There may be terms and conditions that you’ll need to sign as well, and a proof of delivery form to fill out.
Once all of this is done, the broker should have all the pertinent info they need to do their job, such as trailer number, invoice number, date of issuance, type of freight, shipper name, etc. The broker will take a day or two to review it all and the next thing you’ll receive is a notification from them of either acceptance or rejection of your invoice.
If rejected, you’ll need to follow up and find out why. If accepted, your payment will begin being processed. Depending on which broker it’s going through, payment typically takes about 48 hours from the approval of the invoice, then a day or five to come into your account.
What are the problems with broker quick pay services?
Quick pay is something carriers and trucking companies utilize at times. However, there are a number of problems with this service that should be considered before signing up.
- Quick pay fees vary depending on the broker. Brokers charge anywhere from less than 1% to upwards of 5% for quick pay depending on several factors like length of time or the amount the load is paying. In comparison to factoring where the fee charged is the same every time, this can cause frustration and issues for bookkeeping, tax filings, and simple day-to-day expense tracking.
- Not all brokers offer quick pay. This can be a major inconvenience for carriers who depend on quick pay to maintain cash flow. Where most carriers start incurring more costs than factoring, for example, are limiting their operation to only those brokers who offer quick pay, regardless of how competitive the rate they are offering for that load is.
- Quick pay funding times can be very different. The fastest quick pay available funds in 48 hours, but often averages closer to the 4-7 day mark after receipt of the invoice.
- Not only are expenses related to quick pay difficult to track in comparison to factoring, so can the amount of time it takes to pay. Freight factoring consistently deposits your funds in less than 24 hours and has a dedicated in house staff to let you know if anything is missing to process that payment.
- Quick pay is not always reliable. There have been a number of reports of quick pay failing to process payments on time – or even at all. This can be extremely frustrating for carriers who need to pay their bills. In most cases, this can be attributed to the lack of dedicated representatives responsible for ensuring notifying you that the invoice paperwork being submitted is complete and correct.
- It’s limited in its offerings. While quick pay does offer things similar to a factoring company, like a fuel card, the costs and fees associated are often higher and the terms less flexible.
Overall, quick pay can be an option for some carriers and trucking companies, but it is important to be aware of the potential drawbacks before signing up.
A Much Better Alternative to Quick Pay via ACH Deposit? BOLT Instant Funding!
When it comes to getting paid for your hard work, you want to receive payment as quickly as possible, so it’s good to look at all your options. Quick pay will get you paid, the question is, WHEN? Regardless, it will take longer and that puts a strain on cash flow – never a good thing for business.
Fortunately, there is an alternative to quick pay services: freight factoring with OTR Solutions. With OTR Solutions, you can access cash flow in seconds through our BOLT Instant Funding solution. This can give you the cash you need to cover expenses and keep your business running smoothly. In addition, freight factoring with OTR Solutions can help you build a strong relationship with your customers by providing them with flexible payment options.
Is using a quick pay service a bad idea?
This is a question that more and more freight companies are asking themselves. But for any one of them who is looking for the most efficient way to get paid, they should consider freight factoring over quick pay.
The freight factoring process provides immediate payment for delivered goods, allowing truckers to bypass the wait time and higher fees associated with quick pay. If you’re interested in learning more about how freight factoring could work for your business, contact us here at OTR Solutions today. We would be happy to discuss this further and answer any questions you may have.