Freight Factoring for Truckers

Freight factoring is a financing arrangement where you sell your unpaid trucking invoices to a factoring company and get paid 90-97% of the invoice value within 24 hours instead of waiting 30-60 days for the broker or shipper to pay directly. The factor collects from your customer and pays you the remaining balance minus a fee (typically 1-5% of the invoice).

Usually not. Factoring companies care about the creditworthiness of your customers (the brokers and shippers who owe you money), not your personal credit. This makes factoring accessible to new authority carriers and owner-operators who would not qualify for traditional business loans. A few factors run a soft personal credit check for identity verification, but that is different from underwriting.

Factoring is worth it when the cost of waiting for payment is higher than the factoring fee. For new authorities covering fuel, insurance, and truck payments with no cash reserves, same-day funding at 2-3% can be the difference between staying operational and going broke. For established carriers with strong cash reserves, the annual cost (effectively 24-36% APR) may exceed the value of early payment. Our factoring cost calculator shows you exactly where the break-even sits for your volume.

With recourse factoring you are liable if the customer fails to pay — the factor will charge the invoice back to your account. With non-recourse factoring the factor absorbs the loss when a customer goes bankrupt or becomes insolvent. Non-recourse protection usually only covers insolvency (not payment disputes) and costs 0.5-1% more per invoice. Read our recourse vs non-recourse glossary entry for the detailed breakdown.