You deliver the load, but the broker may not pay for weeks. Meanwhile fuel, insurance and truck payments don’t wait. That gap is why so many owner-operators use freight factoring. Here’s how it works and how to keep the money moving.
What is freight factoring?
Factoring means selling your unpaid invoice to a factoring company. Instead of waiting for the broker, the factoring company advances you most of the invoice amount quickly — often within a day or two — and then collects payment from the broker. When the broker pays, the factoring company keeps its fee.
Why carriers use it
- Cash flow: broker payment terms are often 30 days or more.
- Less collection work: the factoring company follows up with the broker for payment.
- Credit checks: many factoring companies can tell you how reliably a broker pays before you haul for them.
Recourse vs. non-recourse factoring
With recourse factoring, if the broker never pays, you have to pay the advance back. With non-recourse factoring, the factoring company takes on more of that risk — usually in exchange for a higher fee and stricter conditions. Always read exactly what “non-recourse” covers in your agreement.
What does factoring cost?
Factoring fees are usually a small percentage of each invoice, and they vary by company, volume and terms. Look beyond the headline rate: ask about monthly minimums, extra fees, reserve holdbacks and whether you’re locked into a long contract.
The notice of assignment (NOA)
When you start factoring, the factoring company sends brokers a notice of assignment. It tells the broker to pay the factoring company instead of you. That’s why your NOA is usually part of the setup packet when a dispatcher books you with a new broker.
The paperwork every load needs
To fund an invoice, factoring companies typically need:
- the signed rate confirmation;
- the bill of lading (BOL), signed at pickup;
- the proof of delivery (POD), signed by the receiver;
- your invoice, plus any detention, layover or lumper receipts.
The most common delay: missing signatures, blurry scans or amounts that don’t match the rate confirmation. Clean paperwork submitted the same day is the fastest way to get funded.
How a dispatcher speeds it up
At Load & Go, billing is part of the service. After delivery we put together the invoice with the rate con, BOL and POD, include any detention or layover claims, and submit it to your factoring company — so you’re not scanning documents at a truck stop at midnight.
And because our 7% fee is only due after the broker pays you, you’re never paying for a load before you’ve been paid for it. See how our billing service works.
