How Invoice Factoring Works for Truckers: Complete Guide
Waiting 30-90 days for payment can cripple your trucking business. Invoice factoring provides immediate cash flow by converting your unpaid invoices into working capital. Here's everything you need to know about freight factoring.
What is Freight Invoice Factoring?
Freight factoring is a financial service where trucking companies sell their unpaid invoices to a factoring company at a discount. Instead of waiting weeks or months for payment, you get cash within 24 hours.
How It Works in 4 Simple Steps:
- 1.You deliver the load and submit the invoice to your factor
- 2.The factor verifies the delivery and invoice details
- 3.You receive 90-100% of the invoice value within 24 hours
- 4.The factor collects payment from your customer
Who Qualifies for Freight Factoring?
Unlike traditional bank loans, factoring approval is based on your customers' credit, not yours. This makes it accessible to:
- New owner-operators with limited credit history
- Small fleets looking to grow without debt
- Truckers with past credit issues
- Companies hauling for creditworthy shippers
How Much Does Freight Factoring Cost?
Factoring fees typically range from 1.5% to 5% of the invoice value. The rate depends on:
- Your customer's creditworthiness
- Invoice volume
- Payment terms (recourse vs non-recourse)
- How quickly your customers typically pay
Cost Example:
Invoice Amount: $2,000
Factoring Fee: 3%
Fee Cost: $60
You Receive: $1,940 within 24 hours
Benefits of Freight Factoring
Immediate Cash Flow
Get paid in 24 hours instead of waiting 30-90 days
No Debt Added
It's not a loan - you're selling an asset
Grow Your Business
Take on more loads without cash flow concerns
Credit Protection
Non-recourse factoring protects against non-payment
Is Freight Factoring Right for You?
Factoring is ideal if you:
- Need consistent cash flow to cover operating expenses
- Want to take on more loads but lack working capital
- Haul for customers with good credit but slow payment
- Prefer to focus on driving rather than collections
How to Get Started with Freight Factoring
- 1
Choose a Factoring Company
Look for competitive rates, no hidden fees, and good customer service
- 2
Submit Your Application
Provide basic business information and customer details
- 3
Get Approved
Most approvals happen within 24-48 hours
- 4
Start Factoring
Submit your first invoice and get paid
Ready to Improve Your Cash Flow?
AutoFreightFactoring offers same-day funding with competitive rates and no hidden fees. Get approved in minutes and start factoring today.
Frequently Asked Questions
Can I factor if I'm a new owner-operator?
Yes! Factoring approval is based on your customer's credit, not yours. Even brand new owner-operators can qualify.
Do I have to factor all my invoices?
No. With spot factoring, you can choose which invoices to factor based on your cash flow needs.
How quickly can I get paid?
Most factoring companies fund within 24 hours. Some, like AutoFreightFactoring, offer same-day funding for invoices submitted before 2 PM.