ENTRY 01 / FREIGHT FACTORING
Freight factoring turns a broker's 30-day promise into cash in your account within a day or two, for a fee on every invoice. For an owner-operator, that fee is one more line on the weekly settlement, next to fuel, insurance and dispatch. This page shows that line honestly, explains how trucking factoring services work, and helps you decide whether you need one at all.
Pick your monthly invoice volume and we will send it to our factoring partner for a quote. By Daniel. Updated October 2026.
ENTRY 02 / THREE CARRIERS, ONE WEEK
Same week, three EXAMPLE carriers: a new MC, an established one-truck owner and a three-truck fleet. Switch factoring on and off, move the rate and the broker's payment terms, and watch what happens to the cash line.
NEW MC · 1 TRUCK · EXAMPLE
Authority 2 months old
| Loads invoiced | $5,200.00 |
|---|---|
| Advance, next day | $4,680.00 |
| Factoring fee | ($156.00) |
| Reserve, day 30 | $364.00 |
| Fuel, insurance, pay | ($3,700.00) |
| Cash this week | $980.00 |
Costs about $675 a month at 3%.
No savings yet and brokers on 30-day terms. Factoring is what lets the second week happen.
ONE TRUCK · MC 3 YEARS · EXAMPLE
Steady lanes, some cash saved
| Loads invoiced | $6,400.00 |
|---|---|
| Advance, next day | $5,760.00 |
| Factoring fee | ($192.00) |
| Reserve, day 30 | $448.00 |
| Fuel, insurance, pay | ($4,400.00) |
| Cash this week | $1,360.00 |
Costs about $831 a month at 3%.
Could float a month if needed. Factoring here is a cost to weigh against a line of credit.
SMALL FLEET · 3 TRUCKS · EXAMPLE
One MC, three drivers paid weekly
| Loads invoiced | $18,600.00 |
|---|---|
| Advance, next day | $16,740.00 |
| Factoring fee | ($558.00) |
| Reserve, day 30 | $1,302.00 |
| Fuel, insurance, pay | ($13,800.00) |
| Cash this week | $2,940.00 |
Costs about $2,416 a month at 3%.
Payroll is due Friday no matter when brokers pay. The gap grows with every truck.
EXAMPLE carriers, not real customers. Typical factoring rates run 2-5% with 75-90% advanced up front (DAT, Oct 2026). Your rate, advance and fees come from your own quote.
The new MC has the least choice. With no savings and brokers paying in 30 days, every load hauled in the first month is paid for out of pocket. Factoring often decides whether the truck keeps rolling into week two.
The one-truck owner has options. With a cash cushion, factoring is a cost to weigh against a business line of credit or simply waiting. Some owners factor only slow-paying brokers and wait on the fast ones.
The small fleet feels the gap most. Drivers get paid every week, and three trucks of fuel do not wait for broker terms. As volume grows, so does your room to negotiate a lower rate.
ENTRY 03 / HOW IT WORKS
Upload the rate con, the signed bill of lading or proof of delivery, and your invoice. Many factors accept photos sent from a phone app.
It verifies the load with the broker and advances most of the invoice, typically 75% to 90% (DAT), often within 24 hours.
On its normal terms. The factor keeps its fee from the reserve and releases the rest to you.
The full version, with what happens when a broker pays late, is in how factoring works.
To open an account, expect to send your MC and DOT numbers, certificate of insurance, a W-9, a voided check and ID. The factor will also search for existing liens on your receivables.
ENTRY 04 / WHAT TO WATCH FOR
Two quotes with the same percentage can cost very different amounts by the end of the year. Read these before you sign with any factoring company for trucking.
A 12-month term that renews itself unless you give notice in a narrow window keeps you paying a rate you may outgrow. Ask for month to month, or a clear end date.
Some contracts charge a fee if you factor less than a set dollar amount. A slow month or a week in the shop then costs you twice.
Leaving early can mean a flat fee, a percentage of your average volume, or buying back open invoices. Get the number in writing before you sign.
ACH fees up to about $10, wires up to $30, invoice processing up to $5 each, according to DAT Outgo. Multiply by every load in a year.
Some contracts require you to factor all invoices from all brokers, including the ones that pay in a week. That takes away your choice to factor only the slow payers.
Under recourse, you buy back invoices a broker never pays. Non-recourse moves some of that risk to the factor, usually only for a broker's insolvency. See recourse vs non-recourse factoring.
Want to know what a quote really adds up to? Freight factoring rates and fees has a calculator that puts every fee on one line. This is general information, not legal advice; have an attorney read any contract you are unsure about.
SOURCE: DAT OUTGO, UNDERSTAND THE COST OF FACTORING, OCT 2026
Revenue stays revenue. You still booked the full rate on the rate con. The factoring fee is a cost of getting paid early, so most bookkeepers record the gross load revenue and the fee as a separate expense line, much like a bank charge. Your accountant decides the exact treatment; ask before your first quarterly estimate.
Track it per load. A fee you never see itemized is a fee you never question. Keep the factor's weekly statement next to your rate cons and check that each advance, fee and reserve release matches the invoice. Small fees hide in totals.
Count it in your cost per mile. At 3% on a $2,400 load of 900 miles, factoring adds 8 cents a mile. That belongs in your floor rate, the lowest rate you will accept, the same as fuel and insurance. Leave it out and loads that look profitable are not.
Plan the exit early. Many owners factor to get through the first months, then stop once they have a cushion. If that is your plan, choose a contract you can leave without a buyout, and build the cushion from week one. Ready to put a truck to work first? Apply for dispatch and factor only if you need to.
ENTRY 05 / ALL FACTORING GUIDES
Each guide answers one question an owner usually has before choosing among freight factoring companies. Start with the one that matches where you are.
ENTRY 06 / WHO IT FITS
The strongest case for factoring. You have costs from the first mile and no payments for weeks. Factors approve based on your brokers' credit, so a new MC can usually get set up. Read factoring for new authorities.
It depends on your cash cushion and your brokers. If most of your brokers pay quickly, or you have a month of costs saved, the fee may not be worth it. Owner-operator factoring walks through that choice with numbers.
Weekly driver pay and higher fuel bills make the gap real. Volume gives you room to negotiate the rate and the contract. See small fleet factoring.
If you have the cash to cover two months of costs and your brokers pay on time, waiting costs nothing. Many brokers also offer quick pay on single loads for a fee, which can cover a short gap without a contract. Is factoring worth it? lays out both sides.
If you run under another carrier's authority, that carrier bills the broker and pays you on settlement, so factoring is its decision, not yours. Factoring becomes your choice once you have your own MC.
Compare the total cost, the contract and how fast they answer the phone when a broker disputes a load. How to compare factoring companies has the checklist.
Tell us your monthly volume and our factoring partner sends a quote with the rate, advance and every fee. No obligation, and factoring is never required to use our dispatch.
| Item | Amount |
|---|---|
| Invoice90% advanced, reserve on broker payment | $2,400.00 |
| Factoring fee at 3% | ($72.00) |
| NET | $2,328.00 |
Freight factoring is selling your unpaid freight invoices to a factoring company. It pays you most of the invoice within a day or two, collects from the broker or shipper on their normal terms, and keeps a fee. You get cash this week for loads that would otherwise pay in 30 days or more.
The reserve is the part of the invoice the factor holds back until the broker pays. If you get a 90% advance, the other 10% sits in reserve; the fee comes out of it and the rest is released to you once the invoice is paid. Some factors advance close to 100% and take the fee up front instead.
Usually not much. A factor is buying the broker's promise to pay, so it checks the credit of your brokers and shippers more closely than yours. Tax liens, existing liens on your receivables or a recent bankruptcy can still matter, and each factor sets its own rules.
Yes, but read your contract first. You may owe notice, a termination fee or a buyout of invoices the old factor has already advanced on. You will also need a release letter for your brokers and the old factor's UCC filing removed or released before the new one can fund you.
Typical rates run about 2% to 5% of each invoice, according to DAT. Volume, broker credit, recourse type and contract length all move the number. Add any ACH, wire, invoice or minimum-volume fees before you compare quotes, because those can change the real cost.
A notice of assignment, or NOA, is a letter telling a broker that your invoices have been sold to a factor and must be paid to the factor, not to you. A broker who receives it and pays you anyway may still owe the factor, so brokers follow it closely.
Many factors fund within 24 hours of receiving a clean invoice packet, and some offer same-day funding, sometimes for an extra fee. Delays almost always come from paperwork: a missing signature on the BOL, a rate con that doesn't match the invoice, or a broker the factor hasn't approved.
We refer carriers to our factoring partner and may be paid for referrals. It never changes your rate. Disclosure.
By Daniel
UPDATED OCTOBER 2026