Starting a New Trucking Business and Your Business Credit Rating

Starting a New Trucking Business and Your Business Credit Rating

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Before you can put the rubber to the road, your new trucking business will require a substantial injection of cash flow. Even if you're lucky enough to already own your rig, marketing, setting up systems, administration costs and day-to-day operating expenses typically mean you need to secure financing until you've got a steady stream of paying customers. Even with regular customers, periods of uncertain cash flow demand a financial backup plan to cover expenses. Invoice Factoring (also known as invoice discounting) is an excellent alternative financing solution for new trucking businesses. 

Building a business credit score from ground zero

One of the biggest challenges faced by new business owners is trying to find financing without a credit history for their business. Business credit scores are calculated using a different system than personal credit scores. Credit reporting agencies collect data on your business's credit transactions to produce your business credit report. The higher the score, the more likely you'll qualify for financing; and the lower the interest rate.

Any financing you receive during a business startup will most likely be based on your personal credit rating and personal assets (because you've yet to build your business credit). However, it's important to start building a strong business credit score from the get go. Here are some things you can do to achieve this:

  • Manage your business credit carefully. That includes putting together a plan that makes the best use of available credit without overextending, and at the most favorable terms and rates.

  • If financials aren't your strong point, hire the expertise to start this part of your business off on the right road.

  • Create a cash flow budget to predict your highs and lows of cash flow. That way, you're not at the mercy of knee-jerk reactions of scrambling for credit, and ultimately paying more than you need to.

  • Pay monthly balances promptly, that includes payment to suppliers.

  • Check your credit report regularly. Pay special attention to items listed in the "negative" category. Look for errors, signs of fraud or outdated information. If you find errors, have them corrected.

Don't think you can afford the time and cost of building a strong credit score? Consider this; a healthy business credit score can have a huge impact on your trucking business's future finances. A few of the things that your trucking business's credit score will impact include:

  • Being approved for financing
  • The rate of interest you'll pay on loans and lines of credit
  • The payment terms suppliers will offer you
  • Your ability to bid on large lucrative contracts

What to do for financing while you're building your trucking business's credit score

Invoice Factoring your trucking business's freight bills is an excellent source of ready cash while you're building your credit score. Factoring involves selling your accounts receivable invoices to a factoring company at a discount in exchange for immediate cash.

Factoring is especially helpful during your trucking company's startup phase because:

  • You don't need a strong credit score to qualify for factoring. That's because qualification is based on your customer's creditworthiness, not yours.

  • Factoring does not create debt. It doesn't show on your balance sheet and won't be taken into account in your credit score.

  • There are no monthly payments with factoring. Because your customer pays the factoring company directly, you aren't tying up cash flow to make payments.

For more information about factoring to create cash flow for your new trucking business, visit


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