Freight factoring
Freight factoring: get paid for a delivered load without waiting 30 days
Brokers and contractors often pay 30 days after delivery, sometimes longer. Your fuel, insurance and truck payment don't wait that long. Freight factoring advances most of each invoice soon after you deliver, for a fee, and collects from your customer for you. We refer carriers to RTS Financial for quotes, and you decide after you've read the terms.
From signed rate con to money in your account
Five documents, then the money in three pieces: the advance, the reserve and the release. Change the EXAMPLE numbers to see how the advance rate and the fee change what you get, and when.
- 01
Rate confirmation
Signed with the broker before pickup. Sets the rate and terms.
- 02
Bill of lading
Signed at pickup. Proves what you loaded.
- 03
Proof of delivery
Signed at delivery, with any shortage or damage noted.
- 04
Invoice
Your bill to the broker or customer, matching the rate con.
- 05
Notice of assignment
Tells the broker to pay the factor. Sent once per customer.
EXAMPLE percentages, not a quote. Your factor quotes your real advance and fee.
One invoice, start to finish
Example- Day 0 · upload paperwork$2,400 invoice
- Advance, often within a day+$2,160
- Reserve held until the customer pays$240
- Factoring fee-$72
- Reserve release after payment+$168
- You receive$2,328
Trucking factoring services, explained without the sales talk
Factoring isn't a loan. You sell your unpaid invoice to a factoring company. It pays you most of the invoice right away, waits for your customer to pay it, then sends you the rest minus its fee. Because the factor gets paid by your customer, approval leans on your customers' credit more than yours.
That's why factoring works for new carriers who can't get a bank line yet, and for any truck where slow pay squeezes the week. It costs money on every invoice, though, so it's worth knowing exactly what you pay and what you get before you sign.
Most trucking factoring companies send your customers a notice of assignment, which tells them to pay the factor instead of you. Brokers handle this every day. It isn't a mark against you.
Factoring company for trucking: who it fits, and who should skip it
Factoring is a tool, not a must. Here's an honest read on when it earns its fee.
Often a good fit
- New authorities without a bank credit line
- Growing fleets adding trucks faster than cash comes in
- Carriers whose customers pay in 30 to 60 days or more
- Dump and construction haulers with slow-paying contractors
- Owners who'd rather not chase unpaid invoices
- Anyone who needs fuel money before a big week
Maybe skip it
- Most of your brokers already pay quickly at a lower cost
- Your margins can't absorb a fee on every invoice
- You have cash reserves that cover a month of costs
- You only need early pay once in a while
Still deciding? Is factoring worth it walks through the math.
Freight factoring or broker quick pay?
Many brokers offer quick pay: they pay you early for a fee. Factoring and quick pay solve the same problem in different ways.
| Factoring | Broker quick pay | |
|---|---|---|
| Who pays you early | The factoring company | The broker itself |
| Works with | Every customer the factor approves | Only brokers who offer it |
| Cost | A fee per invoice, set in your factoring agreement | A fee or discount per load, set by each broker |
| Collections | The factor collects from your customers | Nothing to collect, the broker already paid |
| Contract | A factoring agreement, sometimes with minimums or a term | Usually none, load by load |
| Credit checks | Factors often check customers' credit before you haul | Not applicable |
| Best for | Steady cash flow across many customers | Occasional early pay from a few brokers |
Fees and terms vary by company and by broker. Compare the real numbers in your offers.
More detail in factoring vs quick pay.
How factoring works for trucking, in three steps
- 01
Get approved
You apply with your authority, insurance and the customers you invoice. The factor checks your customers' credit and sets your advance rate, fee and terms.
- 02
Send your paperwork
After delivery, upload the rate con, bill of lading, signed proof of delivery and your invoice. The notice of assignment goes to each customer once.
- 03
Get paid twice
The advance comes first, then the reserve minus the fee after your customer pays. Some factors also offer fuel advances before delivery.
The full version, with every document explained, is in how factoring works.
What to compare between freight factoring companies
The headline rate is one line of the deal. These are the others that decide what factoring really costs you.
Ask every factor
- The advance rate, and when the reserve is released
- The fee: flat, tiered by days to pay, or per invoice
- Recourse or non-recourse, and what each covers
- Contract length, monthly minimums and how to cancel
- How fast you get paid after upload
- Fuel advances and fuel card terms, if you want them
- How they release the notice of assignment if you leave
Watch out for
- Long contracts with auto-renewal
- Termination fees that eat a month of profit
- Fees added per wire, per invoice and per month
- Rates that rise the longer a customer takes to pay
Compare published rates in freight factoring rates, or read our comparison of factoring companies.
“Factoring is just expensive money.”
It can be, if the fee is high and you'd have been fine waiting. Compare the fee with what slow pay actually costs you: a load you couldn't fuel for, a late payment fee on the truck, a week you sat because the account was empty. If waiting costs less, wait. If it costs more, factoring is the cheaper option.
Five paperwork mistakes that delay factoring payments
Most late advances aren't the factor's fault. They come from small mismatches in the paperwork. Check these before you upload.
- 01
The invoice doesn't match the rate con
A different rate, a missing accessorial or a wrong load number gets the invoice rejected or held for review. Copy the numbers from the rate con.
- 02
No signature on the proof of delivery
An unsigned or unreadable POD is the most common hold-up. Get the receiver's signature and name, and photograph it straight away.
- 03
Shortage or damage notes
Remarks on the bill of lading can make a factor wait for the broker to clear the load before paying. Settle those with the broker first.
- 04
The wrong party is billed
Invoice the company on the rate con and send it where the notice of assignment says. A bill sent to the wrong address can sit for weeks.
- 05
Missing lumper or detention receipts
Extras only get paid with their paperwork. Attach the lumper receipt and your detention records to the invoice, not in a separate email.
Why we refer carriers to RTS Financial
We're a dispatch service, not a factoring company. When carriers ask for factoring, we refer them to RTS Financial. On its own site, RTS Financial says it advances more than 90% of the invoice total within 24 hours, then sends the remaining balance, minus a fee, once the customer pays the invoice. It also offers cash in 24 hours or less, with same-day pay after uploading invoices in the RTS app, and says it has 40+ years in financial services.
RTS Financial also notes that factoring is not a loan; approval is based on your customers' credit, and that rates are estimates until full underwriting; RTS quotes through its own rate calculator. Your actual advance, fee and terms come from their quote, not from us.
We may be paid for referrals. That doesn't change the rate you're quoted, and you're free to compare other factoring companies before you decide. See our disclosure.
Freight factoring questions
Is factoring a loan?
No. You sell an invoice you've already earned, and the factor collects it from your customer. There's no loan balance and no interest. Approval depends mostly on your customers' credit, which is why new carriers can often factor before they can borrow.
Do brokers know I factor?
Yes. The factor sends each customer a notice of assignment so they pay the factor instead of you. Brokers work with factored carriers every day, and it doesn't count against you. When you change factors, the old one releases the notice and the new one sends theirs.
How much does trucking factoring cost?
It depends on your volume, your customers' credit, recourse or non-recourse, and how fast your customers pay. Fees are usually a percentage of each invoice, sometimes tiered by days to pay, and some contracts add other charges. Get the full fee schedule in writing and compare it with what slow pay costs you.
Can I switch factoring companies?
Usually yes, but read your contract first. Some have a term, a notice period or a termination fee, and the old factor has to release its notice of assignment and settle open invoices. Plan the switch so no invoice gets paid to the wrong company.
Can I use a dispatcher and factoring together?
Yes, and many carriers do. We dispatch, and the factor funds your invoices. We add the factor's notice of assignment to every broker packet so payment goes to the right place. See dispatch and factoring together.
What is a factoring reserve?
The part of the invoice the factor holds back until your customer pays, often the difference between the invoice and the advance. When the customer pays, the factor releases the reserve minus its fee. Some factors release reserves weekly in a batch.
Do I need good credit to factor?
Usually not as much as for a loan, because the factor relies on your customers paying. Factors still review your authority, insurance and history, and may look at liens or tax issues. Each factor sets its own rules.
We refer carriers to RTS Financial and may be paid for referrals. It doesn't change your rate. Disclosure.
See your factoring rate before you decide anything
Referral to RTS Financial. We may be paid for referrals.