What Is Factoring and When Should Truckers Use It?

Freight factoring is a financial service that helps truckers and carriers improve cash flow by getting paid faster on their freight bills. Instead of waiting 30, 60, or even 90 days to receive payment from brokers or shippers, a factoring company will pay you within 24–48 hours and collect the invoice on your behalf.

How Freight Factoring Works

Here’s a step-by-step breakdown of how factoring typically works for trucking companies:

• You haul a load and deliver it to the customer as usual.
• You submit the invoice, rate confirmation, and proof of delivery to your factoring company.
• The factoring company advances you 90–98% of the invoice amount, usually within a day.
• Once the shipper or broker pays, the factoring company sends you the remaining balance (minus their fee).

Types of Factoring

There are two common types of factoring for truckers:

• Recourse Factoring: You’re responsible if the customer doesn’t pay. It has lower fees.
• Non-Recourse Factoring: The factoring company takes the loss if the customer defaults. Higher fees, more protection.

When Should Truckers Use Factoring?

Factoring is a great solution when:

• You’re a new authority with limited credit history.
• You need consistent weekly cash flow for fuel, insurance, or maintenance.
• You want to avoid taking on debt or maxing out credit cards.
• You’re tired of chasing down slow-paying brokers.

How Much Does Factoring Cost?

Most factoring companies charge between 1.5% and 5% per invoice depending on:

• Your volume (monthly revenue)
• The creditworthiness of your clients
• Whether you're using recourse or non-recourse

Pros and Cons of Factoring

✔ Pros

• Fast access to cash (often same day)
• Improves cash flow and reduces financial stress
• No need to wait 30–60 days to get paid
• Often includes credit checks and collections support

✘ Cons

• Fees reduce total earnings
• Contracts may include volume commitments
• Not every broker is approved by all factoring companies

Recommended Factoring Companies for Truckers

If you're considering factoring, here are a few well-rated companies to explore:

• RTS Financial
• OTR Solutions
• eCapital
• Triumph Business Capital

Before you sign up, compare fees, contract length, funding speed, and whether they offer non-recourse options.

Final Thoughts

Freight factoring can be a game-changer for owner-operators and small fleets who need reliable cash flow without taking on debt. Just make sure to review the fine print, ask about hidden fees, and work with a factoring partner who understands the trucking industry.

Need help finding the right factoring partner? Check out our affiliate resource center on the Money page.