What Is Freight Factoring and Should You Use It?

Freight factoring turns invoices into cash in 24 hours instead of 30-60 days. It's a lifeline for new carriers—but it's expensive. Here's the truth about factoring.

What Is Freight Factoring?

Freight factoring is when you sell your unpaid invoices to a factoring company at a discount. Instead of waiting weeks for a broker to pay, you get cash immediately.

Why Do Owner-Operators Use Factoring?

Cash flow is everything. You have bills now—fuel, truck payments, insurance—but brokers pay later. Factoring bridges the gap.

How Much Does Factoring Cost?

Factoring fees typically range from 1% to 5% per invoice, depending on your volume, broker credit quality, and whether you use recourse or non-recourse.

When Factoring Makes Sense

Use factoring if you're a new carrier with no cash reserves, scaling fast, or working with slow-paying brokers who pay in 60-90 days.

When to Avoid Factoring

Skip factoring if you have 3+ months of cash reserves, work directly with shippers who pay faster, or your brokers offer quick-pay programs at 1-3%.