Short answer: Freight factoring means selling your unpaid load invoices to a factoring company. Instead of waiting 30 days or more for a broker to pay, the factor pays you most of the invoice within a day or two, then collects from the broker. In return it keeps a small percentage of each invoice. Factoring fixes cash flow; it doesn’t make a load more profitable, so the fee has to fit inside your rate.
Most factors charge a flat percentage of each invoice. The exact rate depends on your volume, your brokers’ credit and the type of agreement, so compare written quotes. Watch for extra charges on top of the headline rate.
| Possible charge | What to ask |
|---|---|
| Factoring fee (% of invoice) | Is it flat, or does it rise the longer the broker takes to pay? |
| Same-day or wire fee | Is fast funding included, or extra per payment? |
| Reserve / holdback | How much is held back, and when is it released? |
| Monthly minimums | Do you pay a penalty if you factor less than a set amount? |
| Application, setup or termination fees | What does it cost to start, and to leave? |
Example: on a $3,000 load with a 3% factoring fee, the factor keeps $90 and you receive $2,910. Add that 3% to your cost-per-mile math the same way you add your dispatch fee, so your minimum rate still covers it.
| Recourse | Non-recourse | |
|---|---|---|
| If the broker never pays | You pay the advance back to the factor | The factor takes the loss, but usually only if the broker goes out of business or can’t pay (read the definition) |
| Fee | Usually lower | Usually higher |
| Good for | Carriers who book with brokers they trust | Carriers who want protection against a broker failing |
“Non-recourse” rarely covers disputes over the load itself, such as damage, shortages or late delivery. Check exactly what is covered before you sign.
Your dispatcher sends paperwork in the format your factoring company needs. A dispatcher calls you back within the hour, Mon–Fri.
| Factoring usually helps if… | You may not need it if… |
|---|---|
| You’re a new authority without cash saved for fuel and repairs | You have a few months of operating costs in the bank |
| Brokers pay you in 30 days or more | Your brokers offer quick pay at a fee lower than factoring |
| Chasing unpaid invoices takes up your time | Your invoicing and collections already run smoothly |
Many brokers also offer “quick pay” for a fee on individual loads. Compare it with factoring load by load.
A good dispatcher fits around your factoring, not the other way round:
Running under someone else’s authority instead? On RapidWay’s Lease-On Program we handle invoicing and pay you in weekly settlements, so you may not need factoring at all.
Freight factoring is selling your unpaid load invoices to a factoring company. It pays you most of the invoice within a day or two and collects the full amount from the broker later, keeping a percentage as its fee.
Most factors charge a percentage of each invoice. The rate depends on your volume, your brokers and whether it’s recourse or non-recourse, so compare written quotes and ask about extra fees such as wires, reserves and minimums.
With recourse factoring you repay the advance if the broker doesn’t pay. With non-recourse the factor takes that loss, usually only if the broker can’t pay, and the fee is usually higher.
Not always, but many new carriers use it because brokers often pay in 30 days or more while fuel and insurance are due now. Compare factoring with broker quick-pay options.
No. Broker payments should go to you or your factor, never to the dispatcher. Your dispatch fee is billed to you separately.
No setup fee, no contract, no forced dispatch. 5% for tractor-trailers, 8% for box trucks and hotshots.