SANTA TERESA, NM. MARCH 25, 2014. Interstate Capital Corporation, one of North America’s leading transportation factoring companies, announced today a sweeping price reduction on fuel advances, a financial product that provides fuel money for truckers when they pick up a load. According to Tony Furman, Interstate Capital’s president, “Interstate Capital was among the first transportation factoring companies in the U.S. and Canada to offer fuel advances.” Five years ago, it was virtually unheard of for factoring companies to advance funds to truckers before delivery of freight was verified.
“When we first introduced fuel advances, our standard fee was $49.99 and we could hardly keep up with demand”, recounts Furman. “With Interstate’s recent integration of GPS load-tracking technology, unveiled in January 2014, we are now in the position to pass labor savings along to our clients with fuel advance fees ranging from only $14.99 – $24.99. Our fuel advance fees are now 50% to 70% lower than our standard fee five years ago”.
Even to this day, most factoring companies avoid the practice of providing fuel advances to truckers, primarily due to the risks and costs associated with advancing cash before delivery of freight. The practice of making fuel advances available to truckers exposes factoring companies and freight brokers to the risks that freight may be delivered late, damaged, or not at all. Any of those scenarios lead to the very real possibility that funds (advanced) to a trucker will not be recovered or will be only partially recovered. Relative to risks associated with factoring freight bills, fuel advances–typically 50% of the freight bill amount–are a much bigger gamble and, according to Furman, “not for the faint of heart among factoring companies”.
“Lots of bad things can happen between ‘Point A’ and ‘Point B'”, Furman acknowledges. “You never know if freight will actually be delivered–due to circumstances within or totally beyond the control of the trucker. Five years ago, we viewed the practice of offering fuel advances as a risky and labor-intensive business imperative, and we priced fuel advances accordingly.” Today, Intestate Capital’s use of both proprietary and licensed technology has made fuel advances less risky and less labor intensive.
When Interstate Capital announced its roll-out of GPS technology to reduce its labor costs, it set in motion a chain reaction of events which resulted in the advent of its new fuel advance pricing model. “The integration of the GPS technology,” Furman adds, “in addition to Interstate’s low cost of capital and economies of scale, permit us to compete profitably against freight brokers for truckers’ fuel advance needs. Not only is Interstate Capital’s $14.99 fuel advance far cheaper than most every freight broker, but we deliver funds to carriers in as little as an hour after freight is picked up.” Furman predicts the next evolution in the world of freight bill factoring will be fuel advances in increasingly higher percentages of the freight bill.
“Interstate Capital has a product in the final stages of development that we hope to roll out very soon, which will pay qualified truckers up to 100% their freight charges within an hour of freight pick up,” Furman added. “We hope to make a formal announcement introducing this ground-breaking feature in the very near future.”
The Interstate Capital Group of Companies is a leading marketer of accounts receivable and freight bill factoring, fuel cards, freight matching, freight broker credit reports, property broker bonds, fuel advances, and freight brokerage services. Founded in 1993, Interstate Capital has provided $ billions of funding for over 5,000 motor carriers and other small businesses in the U.S., Canada, and Mexico.