Freight factoring is one of the most common financial tools used by owner-operators and small trucking companies. It solves one of trucking's biggest problems: brokers take 30-45 days to pay, but you need fuel money today. Here's how it works.
What is freight factoring?
Freight factoring (also called invoice factoring or accounts receivable factoring) is when you sell your unpaid invoices to a third-party financial company (the "factor") at a slight discount in exchange for immediate cash.
Here's the simple version: You deliver a load. The broker owes you $2,000 on net 30 terms. Instead of waiting 30 days, you sell that invoice to a factoring company. They immediately advance you $1,900-$1,960 (95-98% of the invoice). Then the factoring company collects the full $2,000 from the broker when it comes due. They keep the difference as their fee.
How the factoring process works
- You deliver the load and get a signed BOL/POD
- You submit the invoice to your factoring company (usually via app or email)
- The factoring company verifies the load was delivered
- They advance you 90-97% of the invoice value, typically within 24 hours
- The broker pays the factoring company directly (per your NOA)
- The factoring company sends you the remaining balance minus their fee
Factoring fees — what do they actually cost?
| Fee Type | Typical Rate | What It Means |
|---|---|---|
| Factoring rate | 2-5% of invoice | The main fee — taken from each invoice |
| Advance rate | 90-97% upfront | What you receive immediately |
| Reserve hold | 3-10% | Held until broker pays, then released to you |
| Monthly minimum | Varies | Some factors require minimum monthly volume |
Recourse vs non-recourse factoring
Recourse factoring: If the broker doesn't pay the invoice (goes bankrupt, disputes the load), you are responsible for repaying the advance. Lower fees. Most common.
Non-recourse factoring: If the broker doesn't pay due to insolvency, the factoring company absorbs the loss. Higher fees. Read the fine print — non-recourse often only applies to broker bankruptcy, not disputed invoices.
Top factoring companies for truckers in 2026
- OTR Capital — no long-term contracts, same-day funding
- RTS Financial — strong fuel card program included
- Triumph Business Capital — large established factor
- Riviera Finance — flexible, good for new carriers
- Denim (formerly Hitch) — technology-forward, app-based
Is factoring right for you?
Factoring makes most sense when you're new and don't have cash reserves to float net 30 payments, or when you're growing fast and need cash flow to take on more trucks. As you build a cash reserve, transitioning away from factoring (and keeping the full 2-5% fee yourself) becomes a meaningful income increase.