Freight Factoring for Owner-Operators: Complete Guide
Brokers typically pay in 30–45 days. Your fuel card, insurance, and maintenance don't wait. Freight factoring bridges that gap — you get paid same day or next day. This guide covers exactly how it works, what it costs, and how to pick the right company.
How freight factoring works
After you deliver a load, you have a freight bill (invoice) that the broker owes you. Instead of waiting 30–45 days, you sell that invoice to a factoring company. They advance you 95–98% of the invoice immediately. When the broker pays in 30–45 days, they pay the factoring company. The factoring company keeps 2–5% as their fee.
Example: $2,500 load
Recourse vs. non-recourse factoring
Recourse factoring
- Lower fee (2–4%)
- Easier to qualify
- You owe money back if broker doesn't pay
Non-recourse factoring
- Factoring company absorbs non-payment
- Protected from broker insolvency
- Higher fee (4–6%)
- Stricter broker approval
Fees to watch for in the fine print
- ACH/wire transfer fee — some charge per transaction
- Early termination fee — typical 3–6 month contract with penalties
- Monthly minimum volume requirements — you pay a fee if you factor below their minimum
- Non-notification penalty — some require you to notify brokers
- Invoice processing fee — separate from the factoring rate
- Fuel advance fees — if you use their fuel card program
Major factoring companies (comparison)
RTS Financial
OTR Capital
Triumph Business Capital
TCI Business Capital
Apex Capital
Rates vary by volume, authority age, and broker quality. Get quotes from 2–3 companies before signing.
Frequently asked questions
What is freight factoring?
Freight factoring is when you sell your unpaid invoices to a factoring company for immediate cash — typically 95–98% of the invoice value. The factoring company then collects from the broker when the invoice is due (usually 30–45 days). You get paid same day or next day instead of waiting.
Is freight factoring worth it?
For most owner-operators, yes. Without factoring, you can wait 30–45 days for payment while your fuel, maintenance, and insurance costs hit immediately. The 2–5% factoring fee is typically worth the cash flow advantage — especially in your first year of authority.
Can I factor without a contract?
Some companies offer spot factoring (per invoice, no contract) but it costs more — usually 4–6%. Most carriers sign a 3–6 month agreement for better rates. Read the termination clause carefully before signing anything longer.