Factoring
Factoring is selling your unpaid freight invoices to a third party at a discount in exchange for payment within a day or two, instead of waiting the broker's normal terms.
Last reviewed · by the fleetchart dispatch desk
A factoring company advances a percentage of the invoice — commonly most of it — immediately, then collects from the broker and remits the balance less its fee. Fees are usually a percentage of the invoice value.
Factoring is bought for cash flow, not for profit. Fuel and drivers are paid weekly while brokers pay in thirty days or more, and factoring closes that gap. The cost of closing it is real: a fee that looks small as a percentage of an invoice is large as a percentage of the margin on that load.
Whether it is worth it depends on the margin per load, which is precisely the number many carriers do not track. Recourse and non-recourse arrangements differ in who absorbs the loss if the broker never pays.