Line 01 / Factoring, in plain words
What is factoring in trucking? One invoice, followed to the bank
What is factoring in trucking? You sell an unpaid load invoice to a factoring company. It pays you most of the money now, collects the full amount from the broker later, and keeps a fee for waiting and collecting. Brokers often pay in 30 days or more; fuel is due today. Factoring closes that gap.
Freight factoring is selling a delivered load's invoice at a discount. The factor advances most of it, usually within a day, holds the rest as a reserve, gets paid by the broker, then releases the reserve minus its fee. It is a cost of getting paid early, not a loan.
How much would you factor a month?
Quotes come from our factoring partner, RTS. We may be paid for referrals.
We refer carriers to our factoring partner, RTS, and may be paid for referrals. It does not change your rate. Disclosure. General information, not financial advice.
Line 02 / Five words that explain factoring
What is truck factoring? Five words cover all of it
Every factoring contract, from any company, is built from the same five pieces. Learn these and you can read any quote. Change the EXAMPLE invoice, advance, fee or recourse window below and each card reprints its number. The numbers are made up to show the arithmetic; real terms come only from a written quote.
Read them together on the EXAMPLE: a $3,000 invoice, 90% advanced, a 3% fee taken from the reserve. You get $2,700 the next day. When the broker pays, the $300 reserve comes back as $210 after the $90 fee. Total to you: $2,910. Some factors take the fee out of the advance instead; the total comes out the same, only the timing changes. The reserve is explained in more depth in what a factoring reserve is.
Line 03 / Recourse vs non-recourse
Who carries the unpaid invoice
With recourse factoring, if a broker hasn't paid by the end of a set window (60 or 90 days are common in published terms), the invoice comes back to you. You repay the advance, or the factor deducts it from your next advances, or you swap in a fresh invoice. Recourse is usually the lower fee because you keep the credit risk.
With non-recourse factoring, the factor carries the loss if a broker can't pay because of insolvency, as defined in the contract. It is rarely broader than that. A load disputed for damage, a short delivery or a paperwork error is often still yours to settle. The fee is usually higher for the protection.
Neither is better in general. Which one fits depends on your brokers, your cash reserve, and how the contract defines a covered loss. The full comparison, with the contract lines to read, is on recourse vs non-recourse factoring.
EXAMPLE
Made-up invoice. What counts as a covered loss is set by each contract.
Line 04 / NOA and verification
What is a factoring company in trucking allowed to tell your broker?
The notice of assignment (NOA) is a short letter from the factor to each broker you haul for. It says you have assigned your invoices to the factor and that payment must go to the factor's address or account. After a broker has it, paying you directly doesn't clear the debt; the broker can be asked to pay again. That is why the NOA matters when you start, switch or stop factoring.
Verification is the factor checking that a load is real before paying: calling or emailing the broker to confirm the load number, the amount and that it delivered. Many factors also check a broker's credit before you book, which is useful on its own. A broker that the factor won't approve is a warning worth hearing, whether or not you factor that load.
What our partner RTS says on its own pages (checked October 2026): it advances more than 90 percent of the total within 24 hours, and says "Get paid the same day". It also offers an app to upload invoices. Its rates and recourse terms are not published; they come in the quote.
Source: RTS, RTS freight factoring · checked Oct 2026
Line 05 / What factoring is not
What does factoring mean in trucking for your books?
It is not a loan. There is no principal to pay down, no monthly payment and no interest rate. In the usual structure, the invoice is sold. Under U.S. accounting rules (FASB ASC 860), a transfer of receivables is recorded as a sale, and leaves your balance sheet, when it meets three conditions: the invoice is legally out of your reach, the factor can sell or pledge it, and you keep no effective control over it. A deal that fails them is recorded as a borrowing secured by the invoices, and some recourse arrangements fall on that side. Your bookkeeper decides which applies to your contract.
Source: Journal of Accountancy (AICPA), Asset-based financing basics: factoring with recourse under ASC 860-10-40 · checked Oct 2026
It is not extra income and it is not a discount on fuel. It is a price paid on every factored load. On the EXAMPLE, $90 on a $3,000 invoice. Over a month of $20,000 in invoices at 3%, that is $600: a real line on your profit and loss statement.
It is not a way around a bad broker. With recourse, the unpaid invoice is still yours. With non-recourse, only the losses the contract names are covered.
General information, not financial, tax or accounting advice. Confirm how to record factoring with your bookkeeper or tax professional.
EXAMPLE
Made-up invoice. Revenue is the full invoice; the fee is an expense. Ask your bookkeeper how to record it.
Line 06 / What you send
How does factoring work in trucking, load by load
- 1. Once: apply, sign the contract, give the factor your broker list. It sends each broker the NOA.
- 2. Every load: deliver, then upload the four documents below the same day.
- 3. The factor verifies and pays the advance to your bank.
- 4. The broker pays the factor on its terms; the reserve comes back to you, minus the fee.
Your invoice
Load number, broker name exactly as on the rate con, pickup and delivery dates, the agreed amount and any approved accessorials.
Rate confirmation
Signed by you. It is the factor's proof of what the broker agreed to pay, so the invoice amount should match it to the cent.
Signed bill of lading or POD
Signed by the receiver at delivery, readable, every page. A missing signature or a cut-off scan is the most common reason funding waits.
Accessorial proof, if billed
Lumper receipts, detention timestamps, the broker's written approval. Without them, extras are usually short-paid.
Clean paper is a dispatch job too
Our dispatchers check that the rate confirmation, the broker name and the agreed accessorials line up before you haul, so the invoice matches when it reaches the factor. You also stay in charge of every load: the rate confirmation comes straight to you, and you sign it or say no. We work with any factoring company, including the one you already have. See dispatch for owner-operators or apply for dispatch.
Line 07 / Questions
What is factoring for trucking, asked plainly
Who collects from the broker?
The factoring company. Once the notice of assignment is on file, the broker pays the factor directly on its normal terms, and the factor follows up on slow payments. Your job is to send clean paperwork. If a broker sends a check to you by mistake, it still belongs to the factor and goes to them.
How is the factoring fee calculated?
As a percentage of the invoice. A flat fee is the same however long the broker takes; a tiered fee starts lower and rises every so many days the invoice stays unpaid. Add any transfer, processing or broker check fees in the contract to see the full cost of one invoice.
How does freight factoring work step by step?
Sign a contract and the factor sends your brokers a notice of assignment. You haul and deliver, then send the invoice, rate confirmation and signed bill of lading. The factor pays the advance, the broker pays the factor on its terms, and the factor releases the reserve, minus its fee.
What happens if the broker pays late?
With a flat fee, nothing changes for you; you were already paid the advance. With a tiered fee, the fee grows while you wait for the reserve. With recourse factoring, an invoice still unpaid at the end of the recourse window comes back to you to repay or replace.
Is factoring the same as a loan?
No. In the usual structure you sell the invoice, so there is no loan balance, no monthly payment and no interest rate. Recourse terms can still leave you owing money if a broker never pays, and some recourse deals are booked as borrowing. Ask your bookkeeper how to record yours.
Next: what the fee looks like across published offers in freight factoring rates, or back to the freight factoring overview.
Get a quote from our partner
Quotes come from our factoring partner, RTS. We may be paid for referrals.
We refer carriers to our factoring partner, RTS, and may be paid for referrals. It does not change your rate. Disclosure. General information, not financial advice.
Written by
Updated October 6, 2026. Every rate and date on this page has its source and the date we checked it. How we research
Now read your own quote with the five words
Tell us your monthly invoices and your MC. RTS sends the advance, the fee, the reserve terms and the recourse window in writing, so you can compare them line by line.
We refer carriers to RTS and may be paid for referrals. It doesn't change your rate.