# Freight factoring

> Freight factoring is a financing arrangement in which a carrier sells its freight invoices to a factoring company for immediate cash, instead of waiting for the broker or shipper to pay on its terms.

Trucking has a cash-flow gap built in: fuel, wages and truck payments are due every week, while brokers and shippers often pay 30 days or more after delivery. Factoring closes the gap. The carrier delivers the load, sends the invoice and paperwork to the factor, and typically receives an advance of about 70 to 95% of the invoice within a day or two. When the customer pays the factor, the carrier gets the rest minus the factoring fee.

The factor is buying the risk that the customer pays, so it checks the paperwork carefully. It will usually ask for the signed [rate confirmation](https://transportial.com/en-us/glossary/rate-confirmation), the signed [bill of lading](https://transportial.com/en-us/glossary/bill-of-lading) or [proof of delivery](https://transportial.com/en-us/glossary/proof-of-delivery), and any receipts for reimbursable charges such as a [lumper fee](https://transportial.com/en-us/glossary/lumper-fee). Missing or unreadable documents are the main reason advances are delayed.

## Recourse vs non-recourse factoring

With recourse factoring, the carrier keeps the risk of non-payment: if the customer does not pay within the agreed period, the carrier must buy the invoice back or replace it. It is the cheaper option. With non-recourse factoring, the factor takes the customer’s credit risk, usually only for insolvency rather than for disputes, and charges more for it.

Compare offers on the total cost, not the headline rate: the fee structure, reserve held back, minimum volumes, whether all invoices must be factored, fuel advance terms, and how long the contract runs. Fast, clean paperwork from the [driver app](https://transportial.com/en-us/product/driver-app) and [invoicing](https://transportial.com/en-us/product/invoicing) module shortens the cycle whichever option you choose.

## Frequently asked questions

### How much does freight factoring cost?

Factors charge a fee per invoice, usually a percentage of its value, and the price depends on volume, your customers’ credit, recourse or non-recourse terms and extra services. Read the whole agreement: reserves, minimums and termination terms can matter more than the rate.

### Is factoring a loan?

No. In factoring the carrier sells an invoice (a receivable) rather than borrowing against it, and the factor collects from the customer. That is why approval depends mostly on the creditworthiness of the brokers and shippers you haul for, not only on your own.

### What documents do I need to factor a load?

Normally the invoice, the signed rate confirmation, and the signed bill of lading or proof of delivery, plus receipts for any reimbursable charges. Every document should show the same load number and amounts.

### Can I factor only some of my invoices?

Some factors allow spot factoring of selected invoices; many require you to factor all invoices from a customer, or all invoices, for the length of the contract. Check this before signing, because it decides how flexible the arrangement is as you grow.


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Canonical page: https://transportial.com/en-us/glossary/freight-factoring