The Lazy Trucking Company’s Guide to Freight Bill Factoring

    Too lazy to research freight factoring for your trucking business? We’ve compiled the essentials into this 5-minute guide.

    It’s no secret that your ability to control your cashflow will make or break your trucking business — whether you’re a solo independent owner/operator or you’re the proud owner of a 50 truck fleet.  If buying float time with the creative use of credit cards or going to your banker, hat in hand, to request a business line of credit has all the appeal of a root canal, there is another option available for small trucking fleets and owner-operator businesses: freight bill factoring.

    For those of you unfamiliar with the practice, transportation factoring is nothing more than assigning your unpaid freight bills to a third party company for less than you would receive if you were to bill your customer and wait for payment.  This enables you to get paid more quickly upon completion of a run, giving you faster access to the cash you need for funding your day-to-day operations.

    Here’s how trucking factoring works, step-by-step:

    1) Once you book your load, you fax or email details about your customer, the load, and your rate confirmation to the factoring service.

    2) The factoring service lets you know if your customer is approved for load factoring

    3) You pull the load

    4) When you’re empty, you fax or mail your Bills of Lading and load-related documents to the factoring company.

    5) Later that day (or within 24 hours) the factoring company will initiate a direct deposit to your bank account or to your Comdata account for the amount of approved charges (which could be 60%-90% of your billing).

    6) Once your customer has paid the invoice, you would receive the balance

    Transportation invoice factoring isn’t for everyone, but it could provide you with the cash you need to keep your wheels turning and provide some stability to your trucking business while you wait for your customer to pay their freight bill.

    'Net 15?' You wish.

    The best option for you is to invoice your customer directly and wait for payment to come in,  but many customers are very slow to pay their invoices.  If you need the cash right away, working with freight factoring companies might provide the financial cushion that you need to keep your trucks on the road.

    Only you can determine if truck factoring makes sense — and this information should arm you with the knowledge you need to make a wise decision and keep from being victimized by a dishonest transport factoring company that might not have your best interests in mind.


    First, it should be noted that truck factoring is not free.  There is a cost involved.  It’s up to you as a business owner to make a determination as to whether or not it’s worth the cost — which can vary from as little as 1.5% to as much as about 5% of the linehaul revenue.

    No such thing as free money

    It’s also important to note that you will likely face paying a number of fees, charges, and other expenses if you utilize the services of a freight bill factoring service.  In most cases, your net proceeds from assigning your bills of lading to a factoring company will more than likely result in your receiving an advance of 60%-90% of the anticipated revenue (depending upon the factoring service you utilize).  The balance would be remitted to you once your customer pays their bill.

    Second, all freight factoring services are not created equally.

    Here are some key questions to ask when considering trucking factoring companies:

    Do you provide recourse- or non-recourse-based freight factoring services?

    The name may seem unfamiliar, but the ramifications to your profitability could be substantial: Recourse-based freight factoring means that if your customer fails to pay the factoring service, that you will allow them to come back to you for reimbursement; whereas, non-recourse-based freight factoring means that even if the bill doesn’t get paid, you have your money.

    Do you require me to let you bill my customer for all future loads I pull for them or can this be done on a load-by-load basis?

    While you may have a temporary cash shortfall that you’re trying to cover by utilizing the services of a freight factoring service, many will require that they handle all future freight bill collections for monies owed to you by that customer.  Depending upon the customer, you may not want to go this route, but keep in mind that some factoring companies are very firm about this requirement.

    Some freight bill factoring services give you the option of deciding on a load-by-load basis whether to handle the billing and collections yourself or whether to let them handle it on your behalf.  In addition, factoring services that will let you make the decision yourself will also let you decide whether you want immediate payment or payment when the invoice is actually paid.  This can be convenient for you, because it will almost permit you to utilize the freight factoring service as a de facto billing service

    Is there a price difference if I let you bill my customer for all loads that I pull for them?

    Some freight factoring companies may permit you to decide on an invoice-by-invoice basis whether you want to bill your customer yourself or have them do it, while others require all billings to originate through them.

    If you utilize their services on a “spot-usage” basis and don’t elect to have a particular invoice factored, you will still likely be faced with paying $15-$20 for billing.  You would then receive payment once your customer pays the invoice.

    Do you charge extra fees for additional services?

    Requirements for Customers — Most freight factoring companies won’t automatically pay invoices from your customers.  They will want to have a reasonable assurance that your customer isn’t a deadbeat, so they will likely require a credit check to ensure that there is a likelihood that they will be paid.  Most transportation factoring companies will do a credit check on your customer for you (which could involve a nominal fee).  Other factoring services will give you access to a list of customers that are “pre-approved” — companies that meet their credit requirements.  This can also come in handy for you, especially if you want to know a prospective customer’s credit prior to booking the load.

    Do you require deposits? And do you advance 100% of the freight bill?

    Some factoring services will require deposits, while others will not.  Before signing on the dotted line, be sure to ask so that you have a clear understanding of exactly what you are getting into.

    It is rare for a factoring service to advance 100% of your freight bill, so find out what their policy will be — and if it will be the same for all customers and freight bills or if it could change from load to load.

    A Few Popular Choices for Freight Factoring:

    Company Rate Reserve Payment Options Fuel Card Fuel Advances Credit Checks
    Freight factoring for trucking companies by Thunder FundingFree Quote

    (877) 780-6530

    2% – 4% Non-Recourse Factoring No Reserve Wire: $20
    ACH: $10
    Express Code: $10

    $10 – $20 per advance, will advance up to 50%

    Free online credit checks

    Freight factoring for trucking companies from Oakhill CapitalFree Quote

    (877) 784-3019

    3.5% Non-Recourse Factoring No Reserve ACH Transfer: Free

    Free access to extensive list of approved brokers

    Freight Factoring for trucking companies from Factor FindersFree Quote

    (888) 724-5062

    1% – 5% Recourse and Non-Recourse Factoring No Reserve Wire: $20

    ACH: $10

    $10 – $20 per advance

    Free online credit checks