GETTING PAID
Freight factoring: get paid for loads now, not in 45 days
Brokers pay on net-30 or net-45. Your fuel and insurance don't wait. Factoring bridges that gap.
SHORT ANSWER
What is freight factoring and does a new carrier need it?
Freight factoring is a financing arrangement where you sell your unpaid load invoices to a factoring company at a small discount and receive most of the money the same day or next day — instead of waiting 30 to 45 days for the broker or shipper to pay.
It is not a loan. You are selling an asset (your invoice) at a discount. The factor collects from the broker, keeps their fee, and you keep the advance. For a brand-new carrier with no cash reserves, factoring is often the difference between making it through the first 90 days and going out of business.
Why a brand-new authority usually needs factoring
When you first get your DOT authority, you have no payment history with brokers and almost certainly no line of credit. Your expenses, however, start immediately:
- Fuel — paid at the pump, not 30 days from now
- Insurance — due monthly, whether or not you have collected on your invoices
- Truck payments and repairs — on their own schedule
- IFTA and other operating costs — accumulate from day one
Without factoring, you complete a load, invoice the broker, then wait. In the meantime you need fuel for the next load. That cash-flow gap is what pushes most new carriers toward factoring. Once you have reserves and established broker relationships, some carriers stop factoring — but most find it easier to keep using it.
Recourse vs non-recourse factoring
Every factoring contract is either recourse or non-recourse. The difference is who takes the loss if the broker never pays:
| Type | Who carries the risk | Typical cost |
|---|---|---|
| Recourse | You — if the broker doesn't pay, the factor charges the advance back to you (usually after 90 days) | Lower fee — you are absorbing the default risk |
| Non-recourse | The factor — they absorb the loss if the broker goes bankrupt or refuses to pay | Higher fee — the factor prices in the credit risk they are taking |
Most new carriers start with recourse factoring because the fees are lower. Many factors also provide a broker credit-check tool so you can see whether a broker is creditworthy before you haul for them — this partially offsets the recourse risk. Read the contract carefully to understand what "non-recourse" actually covers; some agreements only protect you against broker bankruptcy, not general non-payment.
What to watch for in a factoring contract
Factoring contracts vary widely. Before you sign, understand these terms:
- Minimum volume requirements — some factors require you to factor a certain number of invoices per month. If you fall below the minimum, you may owe a fee.
- Contract length and termination fees — some agreements lock you in for 12 months or more with an early-termination fee. Others are month-to-month. Know what you are signing.
- Spot vs contract factoring — spot factoring lets you choose which invoices to factor (pay-as-you-go); contract factoring may require you to factor all your invoices.
- Fuel-card tie-ins — many factors bundle a fuel card with discounts. This can be genuinely useful, but confirm you are not required to use it and that the savings offset any associated fees.
- Advance rate — a factor advances most of the invoice value upfront and releases the remainder (the "reserve") after they collect from the broker, minus their fee. The exact percentage varies by provider and contract — compare it before you sign.
- Notification requirements — the factor will send a notice of assignment to your brokers directing them to pay the factor directly. This is standard, but confirm the process so it does not surprise a broker on your first load.
Factoring companies worth looking at
We have vetted a short list of factoring providers that work with new trucking authorities. Compare their terms directly — rates depend on your volume, load type, and creditworthiness, so we do not publish specific numbers here.
Factoring partners
Porter Freight Funding
Top pickGet paid for a load now instead of waiting 30–45 days for the broker — built for brand-new carriers with no cash cushion yet.
Visit Porter Freight Funding →Summar Financial
Invoice factoring that advances your freight bills so you can cover fuel and repairs between settlements.
Visit Summar Financial →Some links on this page are partner links. If you sign up through them, Vertical Identity may earn a referral fee — at no extra cost to you. We only list providers we'd point a new carrier to regardless.
Frequently asked questions
What is freight factoring?
Freight factoring is selling your unpaid load invoice to a factoring company for most of its value today, instead of waiting 30–45 days for the broker or shipper to pay. The factor advances you the cash, collects from the broker, and keeps a small fee.
Do new trucking authorities need factoring?
Many do. A brand-new carrier usually has no cash cushion, but fuel, insurance, and repairs are due immediately while broker payments lag weeks behind. Factoring closes that gap so you can keep running.
What is the difference between recourse and non-recourse factoring?
With recourse factoring, you are responsible if the broker never pays the invoice. With non-recourse, the factor absorbs that credit risk (usually for a higher fee). New carriers often start with recourse and a broker-credit-check tool.
How much does factoring cost?
Factors charge a percentage of each invoice. Rates vary by company, your volume, and recourse vs non-recourse — compare a couple of providers before committing. We do not quote a specific rate here because it depends on your contract.
Can I use factoring even if I only have one truck?
Yes — most factoring companies work with single-truck owner-operators. Some have minimum volume requirements, but many are specifically designed for small carriers just starting out.
Does factoring affect my relationship with brokers?
Generally no. Factoring is common in trucking and brokers are familiar with it. The factor sends a notice of assignment so the broker knows to pay them instead of you — that is the extent of the change.
Ready to get your compliance stack in order?
Join the consortium today. We handle your random drug testing, Clearinghouse queries, and driver qualification — so you can focus on hauling.
Enroll in the consortiumThis is general guidance, not financial or legal advice. Factoring terms vary by provider and contract — read agreements carefully before signing.