Factoring Grows Up as Truckers Pair Modern Financial Products With Faster Payments

Small Trucking Companies Need Modern Products

When BasicBlock CEO and Co-Founder Taylor Monks has a question related to software the company develops for trucking companies, he drives to a truck stop. There, he interviews truckers and asks them to use the products right there.

“I’m really obsessed with product, the user experience and how the user interacts with a lot of our software,” Monks said.

What he finds in the field, again and again, offers a compelling case for digital innovation in an over $700 billion industry, driven largely by small operators, that nearly every other business in America depends on for its livelihood in some way.

Consider this: 93% of the truck market are trucking companies that have fewer than eight trucks. Often, they don’t get paid for 30 to 45 days.

“Trucking is a pretty cash-intensive business, so they just can’t do that,” Monks said. “Factoring is not anything new, candidly. It is a very simple business; it’s time value of money.”

Offering Fast Payments to a Cash-Intensive Business

In factoring, BasicBlock, a FinTech that helps truck drivers get paid faster, charges a percentage of the invoice to give the trucker the money instantly, so they don’t have to wait a month or longer for whomever is paying the bill to settle the invoice. BasicBlock then gets a check in the mail from the broker, on average, 31 days later.

In January, BasicBlock announced it had raised $78 million to fuel expanded services, client support and employment opportunities. Monks said the company hopes to move into embedded finance and offer full-fledged banking services.

Read more: Truck Financing FinTech BasicBlock Raises $78M

Driving Expedited Payments in Trucking

How quickly the trucker gets paid by BasicBlock depends on the bank account they have. If it’s a Tier 1 bank, they can be paid the same day. If it’s a smaller bank, they’ll get paid in 24 hours.

“Part of the reasons for pushing to go into the full-fledged bank is because we can control that and start paying them immediately for free,” Monks said.

While real-time payments are the norm in the consumer world, that’s not the case in trucking. That’s why BasicBlock was founded, and the company continues to drive expedited payments that the small carriers need and want.

Pushing Into the Banking Ecosystem

Beyond the same-day payments, BasicBlock aims to help truckers manage their finances and get credit. That’s why pushing into the banking ecosystem is the company’s plan for the next couple of years.

“They come to us, and they stay for the real-time payments, but I think that in the future we’ll see a way that we’ll be able to do that for free and ultimately monetize on these other financial products that will help them grow their business,” Monks said.

The company’s acceptance among trucking companies has been driven by word of mouth, referrals and reviews on websites frequented by truckers. While the number of reviews for this young company are lower, the ratings are high.

“That’s driven our growth, which has allowed us to go raise capital, which is to obviously innovate and drive new products to these drivers,” Monks said. “So, it is kind of like this amazing flywheel that we’ve found, that we’ve had an amazing time building as well.”