How instant payments are transforming the trucking industry

Takeaways: 

• Instant payments are revolutionizing the trucking industry by addressing cash flow challenges and reducing payment delays associated with traditional factoring.
• Astra’s technology enables trucking companies to offer instant payouts on factored invoices, allowing truckers to access funds within minutes instead of days.
• By implementing instant payment solutions, trucking ecosystems can improve operational efficiency, reduce financial stress for drivers, and create new revenue opportunities for service providers.

It’s hard to overstate how much the economy depends on truckers. These road warriors are the backbone of our nation’s supply chain:

• In 2021, they moved 72% of the country’s freight by weight and transported the top ten U.S. commodities by value and tonnage.
• Last year, truckers carried more time-sensitive and valuable items than any other transportation method.
• Their contribution to the 2021 GDP was a staggering $185.1 billion.

Despite their crucial role, for-hire truckers operate much like small businesses, running their endeavors as independent contractors. This business model comes with its own set of challenges. Truckers must pay for expenses out of pocket, a task made difficult by the industry’s notoriously irregular cash flow patterns.

These liquidity challenges create a ripple effect, impacting both truckers and the companies they serve. Slow payments to truckers inevitably slow down their ability to take on new loads, creating inefficiencies throughout the supply chain.

To address this issue, the industry has turned to factoring — a financial solution that helps bridge the gap between completed work and payment. However, even factoring has its limitations. 

That’s where instant payment technology comes in. 

When trucking companies combine factoring with instant payments, truckers can receive funds immediately, allowing them to continue working without delays.

To fully appreciate the potential of instant payments, it’s crucial to understand the current payment landscape in trucking. Let’s take a closer look at how truckers are typically paid today through factoring, and the challenges this method presents.

Key challenges in the factoring process

In a factoring arrangement, a truck driver sells their outstanding invoice for a delivered load to a financier (or factor) to collect on. In exchange, the trucker gets a large percentage of the invoice amount, up to 98% in most cases. 

“Factoring is not a loan, so it doesn’t add debt to the business’s balance sheet. Instead, it leverages the value of accounts receivable,” said the International Factoring Association.

This factoring process is supposed to support truckers by offering them payments in several days rather than 30-day or 45-day invoices. This payment speed is critical as truckers face numerous financial hurdles in their day-to-day operations. 

• A for-hire trucker sees margins as low as 6% for a refrigerator van after fuel costs, truck maintenance, insurance, toll fees, permits, and licensures. 
• Many trucker expenses are flat costs of doing business, and they must be paid regardless of the number of loads scheduled. These costs are cited as the number one challenge of being an owner-operator, more burdensome than supply chain issues, providing capacity, or even regulations. 
• In 2022, the per-mile operating cost increased to $2.251. This was the first time it crossed the two-dollar threshold and marked a decision point for the industry.

While factoring is supposed to alleviate some of these pressures, it’s not without its own set of issues. Here are several key challenges that truckers often encounter when utilizing factoring services:

Factoring can be an administrative burden

It takes time for truckers to vet factors, compare terms, and sign up for their services. When they find a reputable factor, not all of them embrace the digital tools available. Truckers who complete a job must turn in their invoices and wait for approval, often providing more documentation to show the job was finished. 

There are some modern factors that let truckers snap a mobile phone photo for digital uploading, but it still requires a paper trail and the ability to handle administrative duties from the road. 

Factoring is slow

Without factoring, truckers would hand over an invoice and not get paid for 30 to 45 days. This delay can create cash flow challenges and impact operational stability. But giving their invoices to a factoring company doesn’t always solve the problem.

After the trucker gives the invoice to a factoring company, which advances them the amount of the invoice minus a fee of around 2%, there’s a significant wait time for funds to clear. Money gets deposited as a bank wire or standard ACH transfer, which takes several days before the cash is available to spend (or longer if there are weekends and holidays in the payment period).

“With traditional factoring, the invoice is approved, and you have to decide if you want a wire transfer or ACH,” said TruckSmarter’s Michael Bright. “You have choices, but you still have that bank timeline delay and fees associated with it.”

Because there are so many expenses for today’s trucker to cover between when a load is dropped and an invoice gets paid, factoring only eases some of the cash flow burden. 

Depending on when the invoice is submitted to the factoring company, there could still be a lengthy wait to get cash in hand to fuel the next job.

Circumstances that affect how long the factored payment takes to clear include:

• Bank holidays
• The time of day the invoice was submitted
• The sending bank’s policies
• The receiving bank’s policies
• The factoring company’s processing times

If all of these factors lean toward a longer delay, it could be many calendar days before the payment clears the trucker’s account. Meanwhile, truckers still need to pay for the next leg of a trip and could possibly even have to turn down work until the payment hits their bank account.

How Astra enables instant payments for factoring

What if truckers could get their payments instantly, without waiting one to five business days for the factoring payment to clear their bank account and move from “pending” to “available” funds?

Astra takes the wait time for a factored payment from days to minutes.

The platform connects software and factoring platforms to trucking end users, so when the factoring company pays out, it appears instantly on a trucker’s debit card. Truckers get immediate access to cash for refueling, safely stopping for the night in inclement weather, or even receiving emergency tire repairs.

The Astra instant payment technology pairs with existing factoring solutions to give truckers the flexibility to do their best work. It reduces unnecessary financial restrictions with payments available 24 hours a day, 7 days a week (even on weekends and holidays).

Instant debit card disbursements

Currently, when a trucker wants to factor an invoice, they send it to be approved and may choose to have the funds put directly into their checking account. This account may already have a debit card attached, but they can’t use that debit card until the funds fully clear. They get a notification when the factoring company pays the invoice, but where’s the money?

Depending on the bank they use, it could be days before it’s spendable because ACH and RTP can be difficult to set up — especially the first time. These transactions are also subject to other delays.

Astra’s API, however, can send money directly from a connected account, so factoring companies can instantly disburse it to truckers’ debit cards and get them back on the road in minutes (not days).

“We make it immediate. A trucker can say, ‘I just finished a job, and I need to gas up right now. I can literally use the money from the job and just go pay for gas,” said Gil Akos, CEO of Astra.

Simple integration

Astra is an all-in-one embedded finance platform that supports all the payment options in one solution. Currently, Astra supports bank and card “rails” such as Visa Direct, Mastercard Send, RTP, ACH, and FedNow, giving you a wide variety of payment options. It also supports instant payouts from factoring. 


With the Astra SDK, product developers can set up instant payment capabilities with a few API requests. Astra even provides a full library of guides and updated documentation. With all the available support,  trucking vendors and factoring companies can go live with their instant payment capabilities in as little as a few weeks if not just a few days. 

No complicated maintenance

When the trucker taps to authorize fast payment from within your app, they initiate the disbursement. Astra manages everything from pre-funding to processing the original credit transaction (OCT) before sending it directly to the trucker’s debit card.

There are no complex settlements to administer, and you won’t have to pay for additional operational overhead. Everything appears to the driver as a payment option within your product. They select factoring and their payout choice, and if they choose instant payout, it gets handled for you. 

Get additional fees

Truckers already expect to pay for factoring and include it in the cost of doing business. With the acceptance of factoring as a necessary tool, many are happy to pay a few percentage points to get money in hand and start earning with the next job. 

Astra offers factoring platforms a transparent pricing model, which they can integrate into their solution. Truckers who use these factoring platforms can then see what they would pay for instant payments of factored invoices. 

Offering factoring services with instant payments is a win-win upsell for your business and truckers. If you charge a small fee for the instant payment option, your revenue will increase and truckers will have a more convenient payment method.

How instant payments improve the entire trucking ecosystem

Truckers aren’t the only ones who need to access funds instantly. An entire supporting cast and crew keeps the trucking industry alive — including the towing companies that help broken-down trucks, repair shops, and the businesses that sell to truckers on the road.

Instant payments ensure all the players get cash access when they need it so they can stay in business and continue to serve for-hire truckers. Here are two examples of how instant payments are changing the trucking business for the better.

RoadSync

RoadSync is a seamless digital payments platform that serves drivers, lumpers, brokers, vendors, and others within the transportation ecosystem. It uses Astra’s instant payment capabilities to reduce many small business owners’ pain points when sending or receiving money.

The company has partnerships with dispatching and scheduling tools, so its solution immediately generates an invoice and pay link when jobs are scheduled and completed. This reduces the frustration a driver might face on the road if they experience a breakdown and need to pay a tow truck right away. 

RoadSync also simplifies lumper payments, which truckers receive for loading and unloading cargo. These payments can hold up a trucker for hours as they navigate approvals and calls between field offices.

“We are really hyper-focused on the payment processing and the value it provides,” said Whitney Weaver, CTO at Roadsync.

This instant payout technology pairs perfectly with factored invoices, which can be set to pay out immediately. Roadsync’s technology keeps cash flowing seamlessly between truckers, warehouses, repair shops, and more, which helps precious cargo get to where it’s needed faster than before. 

“When it comes to new and exciting, it’s really on the RoadSync pay services side,” said Weaver. “We focus on ‘how do we help freight brokers pay out a carrier for a final load payment?’ We want to be best in class at getting cash to carrier the fastest.” 

TruckSmarter

Industry leader TruckSmarter offers a full suite of services and finance tools for the trucking community, including a load board and substantial fuel discounts through partner truck stops. These partnerships help fuel stops get frequent business from the trucking community. 

The company’s flexible embedded banking tools also allow truckers to conduct business in a way that’s best for them.

“Our embedded bank account makes capital available to the end user faster, even if it’s locked in a truck,” said TruckSmarter’s Michael Bright.

In the TruckSmarter app, truckers can set up invoices and find pre-approved, vetted brokers to submit invoices to. They can also choose to have money factored in the more traditional, slower manner or request funds be instantly put onto their TruckSmarter debit card. This instant payment option is thanks to TruckSmarter’s partnership with Astra. 

Since truckers are likely to need those funds right away for fuel or maintenance expenses, the instant payment option makes sense. It’s a natural way to access the working capital, and it reduces the steps needed to get on to the next job.

“Instant disbursement to the trucker is a sort of self-running machine,” said Bright. “We don’t have a ton of overhead to keep it operating, which is extremely important for us.” 

The future of payments in trucking

When truckers and service providers have to wait days for payment, it costs them opportunities and diminishes their earnings for the year. Truckers still have to pay the daily rate for insurance and their truck payment, whether they are working or not.

Instant payment technology transforms the entire trucking ecosystem. It keeps money flowing into the hands of truckers and the service providers that support them. 

Faster factoring with Astra is one thing business owners can do now, with no extra work, to stay competitive and better withstand the challenges in our economy. With Astra’s instant payments capabilities, better is within reach, and it only requires minimal developer resources.

Ask how you can meet the changing needs of the modern trucker and generate new revenue streams with instant payments embedded in your app. Contact our team today.