Factoring Companies (Managing Cash Flow)

What Is Freight Factoring?

Freight factoring means selling your invoices to a factoring company. Instead of waiting 30 or more days to get paid, the factoring company advances most of the invoice amount within 24 hours. The factor then collects payment directly from the broker or shipper.

The factoring company charges a service fee, typically between 2 and 5 percent of the invoice value, depending on volume and risk profile.

How Factoring Works

After delivering a load, you submit your invoice and proof of delivery to the factoring company. They verify the paperwork and may advance approximately 90 to 97 percent of the invoice value immediately.

When the broker pays the invoice in full, the factoring company releases the remaining balance to you minus their fee.

In non recourse factoring, the factoring company assumes the risk if the broker fails to pay due to credit issues. In recourse factoring, you are responsible for repaying the advance if the broker does not pay within a specified timeframe.

Benefits of Factoring

• Improves cash flow and eliminates long payment waits
• Provides fast access to working capital
• Reduces administrative burden of collecting payments
• Allows you to cover fuel, insurance, and operational expenses consistently

Factoring is widely used in the trucking industry, especially among small carriers and owner operators.

Choosing a Factoring Company

There are many freight factoring companies that specialize in trucking. When evaluating options, compare contract terms, fee structures, and additional services offered.

• Recourse versus non recourse options
• Contract length and cancellation terms
• Minimum volume requirements
• Advance rate percentage
• Credit check services for brokers
• Additional perks such as fuel cards or load board access