Trucking and logistics companies need working capital because fuel, drivers and maintenance are paid as loads move, while shippers and brokers commonly pay 30–60 days after delivery. Every new truck or lane adds to that gap before it adds to revenue.
The cash gap on a single load
One long-haul load for a freight broker (illustrative)
- Day 0− Fuel and tolls for the run
- Day 3− Lumper and detention costs at delivery
- Day 7− Weekly driver settlement
- Day 14− Tires and preventive maintenance
- Day 40+ Broker pays the freight bill
Why do trucking companies run short of cash?
Fuel paid at the pump
The biggest variable cost, paid before the load pays.
30–60 day freight terms
Plus delays for missing paperwork.
Weekly driver pay
Drivers are paid long before customers pay you.
Repairs and tires
A breakdown costs the repair and the lost loads.
Insurance premiums
Large down payments and renewals.
Adding trucks
Each unit needs a down payment, permits and a driver.
How much working capital does a carrier need?
Per load, the gap is small. Across the fleet at 30–60 day terms, it compounds:
| Illustrative: eight loads in transit | Amount |
|---|---|
| Fuel and tolls per load | $1,800 |
| Driver settlement per load | $900 |
| Maintenance and tires allocated per load | $400 |
| Cash out per load before the broker pays | $3,100 |
| Eight loads in transit at a 40-day average | about $24,800 |
This is the number factoring is really priced against. Factoring turns a 40-day wait into a 1–2 day wait, but the fee is charged on the invoice, so on thin-margin lanes it can eat the load's profit. Compare the factoring fee with the cost of carrying the gap yourself before you sign a long factoring contract.
Funding options for trucking companies
| Option | Fits which gap | Speed | Cost | Watch out |
|---|---|---|---|---|
| Freight factoring | Unpaid invoices | 1–2 days per invoice | Medium | Recourse terms, long contracts, minimums |
| Fuel card programs | Fuel and tolls | Days | Low | Network and discount limits |
| Business line of credit | Repairs, payroll gaps | Days–weeks | Low–medium | Needs history |
| Equipment financing | Trucks and trailers | Days | Low–medium | The truck is collateral |
| SBA 7(a) | Expansion, refinancing | Weeks–months | Low | Paperwork, time in business |
| Merchant cash advance | Emergency only | 1–3 days | High | Debits don't wait for brokers to pay — see MCA default |
Why banks often say no to carriers
| Bank concern | What helps |
|---|---|
| New authority, short history | Factoring and fuel-card history, clean safety record |
| Volatile fuel costs and rates | Contracts or dedicated lanes, fuel surcharge terms |
| Customer concentration | A mix of brokers and direct shippers |
| Depreciating collateral | Maintenance records and equipment values |
Already carrying advances? Compare MCA consolidation lenders or MCA debt restructuring.
Frequently asked questions
What are logistics companies’ working capital needs?
Fuel, driver pay, tolls, maintenance and insurance are paid as the freight moves, while shippers and brokers commonly pay 30 to 60 days after delivery and paperwork. The gap grows with every truck you add.
What are examples of working capital needs in trucking?
Fuel and tolls for each load, weekly driver settlements, repairs and tires, insurance premiums and down payments, permits and registrations, and the cost of carrying unpaid freight invoices.
Is freight factoring better than a merchant cash advance?
For most carriers, yes. Factoring advances money against invoices you have already earned and is repaid when the customer pays, so it follows your cash cycle. A merchant cash advance takes fixed daily or weekly debits whether loads pay or not.
Can a new trucking authority get working capital?
Options are narrower in the first months. Factoring companies and fuel-card programs often work with new authorities because they rely on your customers’ credit; banks and SBA lenders usually want more operating history.