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Cash flow challenges are common in the trucking industry due to mismatched payment terms between shippers and carriers.
While shippers demand immediate service, carriers often wait 30 to 90 days for brokers and shippers to settle invoices. During this time, essential expenses like fuel, tolls, and driver wages still need to be covered, creating financial strain even for profitable trucking companies.
Factoring for trucking companies has become a widely used solution for these challenges. Truck factoring companies provide immediate working capital, helping businesses keep operations running smoothly without waiting on slow-paying brokers.
With the right freight bill factoring partner, trucking companies can access funds in as little as 24 hours.
Read on to learn how freight factoring services work — and how Business Factors can help you get paid faster.
How Freight Factoring Works
A Faster Way To Access Your Earnings
Here’s how truck factoring with Business Factors works:
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Submit Your Unpaid Invoice
After you’ve delivered a load, send us your freight bills and supporting documents, such as the bill of lading and rate confirmation.
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Wait for Our Invoice Verification
We confirm the details of your invoice and check the broker or shipper’s credit standing to ensure everything is accurate.
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Advance Payment and Reserve
Once verified, we advance you up to 96% of the invoice value, putting cash in your account so you can cover fuel, payroll, and other expenses.
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Final Payout
When your customer pays in full, you’ll receive the rest of the invoice amount, minus the agreed factoring fee.
Costs and Fees
Understanding Pricing for Freight Financing
Trucking businesses often rely on financing tools to keep their operations moving. These options vary widely in cost, approval requirements, and risk.
With factoring, the expense is usually presented as a factoring fee or discount rate: a small percentage of the invoice value that covers immediate funding and collection services. Understanding how this compares with other financing tools helps you choose the best fit for your trucking business.
The table below outlines the common financing options along with their typical rates:
How Truck and Freight Factoring Fees Are Structured
Factoring fees can be set up in different ways depending on the agreement. Two of the most common structures in factoring for trucking companies are monthly and weekly fee models.
Below are examples showing how each works in practice.
Example 1: Monthly Fee Model
In this setup, you receive $2,375 upfront. The factor charges $50 each month (2% of $2,500) until the invoice is paid, up to the reserve of $125.
If the customer pays in one month, you’ll get $75 back from the reserve ($125 – $50). If payment takes longer than three months, the full reserve is used, and no balance is returned.
Example 2: Weekly Fee Model
Here, you receive $2,700 immediately. The factor deducts $22.50 weekly (0.75% of $3,000) until the invoice is paid, up to the $300 reserve.
If payment comes in four weeks, you’ll get $210 back from the reserve ($300 – $90). If it takes more than 13 weeks, the full reserve is absorbed.
Hidden Fees and How To Avoid Them
Invoice factoring can be a reliable way to strengthen cash flow, but trucking businesses should carefully examine the fine print before committing.
These costs can reduce the value of the arrangement over time:
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Administrative Fees:
Some factors charge for account setup, credit checks, or account maintenance.
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Invoice Processing or Handling Fees:
A fee may apply for each invoice you submit, which can add up quickly if you’re factoring many smaller loads.
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Minimum Volume or Early Termination Penalties:
Extra charges may apply if you don’t meet monthly factoring minimums or exit a contract before it ends.
Practical Tips To Avoid Hidden Fees
The good news is that you can protect yourself from these unexpected costs.
Keep your factoring partnership cost-effective with these tips:
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Get a Full Fee Schedule in Writing Upfront:
Request a detailed breakdown of every fee so you know exactly what to expect before signing.
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Review Renewal or Cancellation Terms Thoroughly:
Understand how long the contract lasts, whether it auto-renews, and what penalties apply if you need to leave early.
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Track All Invoices and Fees Over Time:
Maintain clear records of payments and charges so you can spot discrepancies quickly and address them with your factor.
Why Your Trucking Business Needs Factoring
Eliminate Cash Flow Gaps That Stall Operations
Freight invoices often take 40 days or more to clear. Unfortunately, slow payments from brokers and shippers can make it difficult for carriers to manage day-to-day expenses. At the same time, rising interest rates and tighter credit requirements have made it harder for many trucking businesses to secure traditional financing.
Factoring for trucking company operations offers a practical alternative to bank loans by providing fast, reliable funding. With truck factoring companies, you receive payment within 24 to 48 hours of delivering a load, eliminating the wait and keeping your business financially stable.
Ultimately, steady funds allow you to take on new contracts and expand operations. Whether you’re an owner-operator securing a new job or a small fleet owner looking to hire drivers or invest in more trucks, freight factoring services provide financial flexibility to support growth.
Industries That Benefit From Truck and Freight Bill Factoring
See How Factoring Meets Various Business Needs
In trucking, delayed payments are common, but expenses like fuel and driver pay can’t wait. Invoice factoring helps carriers and freight businesses convert unpaid invoices into immediate cash to keep operations moving.
Owner-Operators
Small Fleets
Freight Brokers
Specialized Freight Haulers
Multimodal Carriers
Expedited Carriers
Get Steady Cash Flow To Keep Your Fleet Fueled and Ready
No More Pumping the Brakes on Payments
Slow payments shouldn’t slow you down. As a trusted factoring company for truckers, Business Factors provides fast funding, high advance rates, and non-recourse factoring to protect you from unpaid invoices.
Let us help keep your trucks on the road and your business moving forward. Send us the information below, and we’ll reach out quickly to discuss your cash flow needs.
FAQs About Freight and Truck Factoring Services
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How does freight factoring work for trucking companies?
Freight factoring provides trucking companies with immediate access to funds by converting unpaid invoices into cash. Instead of waiting for brokers or shippers to pay, carriers receive a quick advance while the factoring company handles collections. Once the customer pays, the remaining balance is released minus a small fee.
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What types of trucking businesses can benefit from factoring?
Factoring freight bills benefits various trucking businesses, including owner-operators, large fleets, freight brokers, and intermodal companies that need steady cash flow. It’s also useful for dump truck haulers, hotshot drivers, automobile transporters, and long-haul carriers covering fuel and operating expenses.
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How fast can I get paid with truck factoring services?
Most freight bill factoring companies process payments within 24 to 48 hours of invoice submission. Some offer same-day funding if invoices are submitted early in the day.
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What are typical trucking factoring rates, and what affects pricing?
Factoring rates generally range from 1% to 5% per invoice, depending on factors like customer creditworthiness, payment terms, invoice volume, and whether you choose recourse or non-recourse factoring. Carriers with high invoice volume and creditworthy customers typically receive lower rates.
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Are there any hidden fees in freight bill factoring?
A reputable factoring company will disclose all fees upfront. Some may charge additional fees for setup, ACH transfers, wire payments, contract termination, or monthly minimums. Always review the contract carefully to ensure transparent pricing.
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What are the requirements to qualify for truck factoring?
Factoring approval is based primarily on your customer’s credit history and payment reliability, not your company’s credit score. Most factors require invoices to be free of liens and unpaid at the time of submission. Some companies also have minimum invoice volume requirements.
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Can I use factoring if my trucking company has bad credit?
Yes. Partnering with a factoring company freight business allows you to qualify based on your customers’ credit, not your own. You can still be eligible for factoring if you haul for creditworthy brokers and shippers.
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What’s the difference between recourse and non-recourse freight factoring?
With recourse factoring, you are responsible if a broker or shipper fails to pay, meaning you must repay the advance or replace it with another invoice. Non-recourse factoring shifts the risk to the factoring company if the customer becomes bankrupt or insolvent, though it typically comes with slightly higher fees.
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Do factoring companies pay for fuel advances or provide fuel cards?
Many factoring companies for the trucking industry offer fuel advances, allowing you to access a portion of your invoice upfront for fuel expenses. Some truck factoring services also include fuel cards, which allow a percentage of factored funds to be deposited directly for fuel purchases at participating truck stops.
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Is truck factoring a long-term contract, or can I use it on a per-load basis?
This depends on the factoring company. Some require long-term contracts, while others offer flexible, load-by-load factoring with no monthly minimums. Be sure to choose an option that fits your business needs.