Freight factoring is a financial service that allows trucking companies to sell their unpaid invoices to a factoring company in exchange for quick payment for a small fee.
For carriers facing long payment windows from brokers or shippers, factoring can be the key to maintaining steady cashflow, covering fuel costs, and keeping trucks on the road.
In this guide, we’ll break down how freight factoring works, the different types available, and how to choose the right factoring partner for your business.
What Is a Factoring Company?
A factoring company in the trucking industry acts as a financial partner, bridging the gap between delivering loads and getting paid. Since brokers and shippers often take 30, 60, or even 90 days to settle invoices, this delay can put serious strain on a carrier’s cashflow.
Freight factoring solves this problem by turning unpaid invoices into immediate cash. Instead of waiting weeks, you sell your invoice and receive payment faster. With OTR Solutions, that’s often within 24 hours. It’s a simple way to access the money you’ve already earned and keep your business moving forward.
How Does Freight Factoring Work?
Freight factoring follows a straightforward process that puts cash in your pocket fast:
- Deliver Your Load: Complete your delivery and collect all required paperwork, including the bill of lading, rate confirmation, and proof of delivery.
- Submit Your Invoice: Upload your documents through the factoring company’s mobile app or online portal. With OTR Solutions, you can submit invoices 24/7 using our Mobile App or Client Portal.
- Get Paid Fast: Receive same-day funding on processed invoices. OTR Solutions offers BOLT Instant Funding after invoice processing for even faster access to your money.
- We Handle Collections: Your factoring company invoices your customer and handles all collection activities. You never have to chase down payments or deal with slow-paying brokers again.
This process replaces the 30–90 day payment cycle with fast and reliable funding, freeing up cash to cover fuel, maintenance, and new loads.
So, how does freight factoring work so efficiently? By outsourcing invoicing and collections to your factoring partner, you eliminate delays and reduce administrative burdens, allowing you to operate with confidence and stability.
The Primary Types of Freight Factoring
Not all freight payment solutions are created equal. While options like QuickPay may appear similar to factoring, they often come with higher fees, inconsistent timelines, and limited support. True freight factoring gives carriers a reliable way to access cash quickly, and it comes in two main forms: recourse and non-recourse.
Understanding what the difference is between non-recourse and recourse freight factoring can help you choose the right solution based on your risk tolerance, broker network, and long-term financial goals.
Recourse Freight Factoring
In recourse factoring, the carrier is responsible if the broker or shipper fails to pay. If the factoring company can’t collect on the invoice, you’ll be required to repay the advance or “buy back” the invoice.
While this model usually comes with lower fees, it also carries more risk, especially when hauling for new or unknown brokers. Recourse factoring may be a better fit for carriers with established broker relationships and a strong understanding of credit risk.
Non-Recourse Freight Factoring
With non-recourse factoring, the factoring company assumes the risk of non-payment due to broker credit issues or bankruptcy. This provides greater peace of mind for carriers. If a covered broker doesn’t pay, you’re protected.
Because the factoring company is taking on more risk, non-recourse plans may come with slightly higher fees. Yet for many carriers, the added security is well worth it.
At OTR Solutions, we offer TRUE Non-Recourse Factoring, meaning if your broker fails to pay due to qualifying credit-related issues, we’ve got you covered. No chargebacks. No surprises. Just guaranteed payment when you need it most.
How Much Do Freight Factoring Companies Charge?
Freight factoring rates typically range from 2.5%–3.5% for most carriers, but can be as low as 1% for large fleets. However, your exact rate will depend on several factors, including your monthly invoice volume, contract terms, and whether you choose recourse or non-recourse factoring.
Beyond the rate itself, it’s important to understand what you’re actually paying for. Some factoring companies advertise low fees but tack on hidden charges for invoice processing, ACH transfers, same-day funding, or early contract termination. These extras can quickly eat into your cashflow if you’re not careful.
At OTR Solutions, we take a transparent, value-driven approach. Our pricing reflects the strength of TRUE Non-Recourse Factoring, same-day funding, and a dedicated support team that knows trucking. With integrated tools like the OTR Fuel Card and Mobile App, you’re partnering with a company that helps you run leaner and grow faster.
What is the “Best” Freight Factoring Company?
We won’t claim to be unbiased, but we will be honest. The best freight factoring company is the one that fits your business’s unique cashflow needs, service expectations, and growth goals.
Whether you’re a new authority or an established fleet, these are the most important variables to consider when evaluating your options:
Transparent Fees
Don’t let advertised rates fool you. Some factoring companies lure carriers in with “as low as” pricing, only to bury extra charges in the fine print. Watch for:
- Invoice processing or ACH transfer fees
- Same-day or weekend funding fees
- Early termination penalties
- Monthly minimum volume requirements
The best freight factoring companies are upfront about total costs. At OTR Solutions, we believe transparency builds trust, which is why you’ll always know exactly what you’re paying.
Flexible Contract Length
Some factors lock you into long-term commitments, often 6, 12, or 24 months, with hefty fees if you cancel early. Others may require minimum invoice volumes each month.
If you’re just getting started or want more control, look for month-to-month agreements or low-commitment options. OTR offers flexible contract terms so you can scale at your own pace without being locked in.
Fast, Reliable Payment Schedule
Speed matters, especially when fuel, maintenance, and repairs don’t wait. While some factoring companies take 3–4 business days to fund invoices, others (like OTR) offer same-day or next-day funding on approved invoices.
The right partner should make it easy to stay liquid and avoid downtime.
Support That Goes Beyond the Basics
The best factoring companies don’t just process payments; they support your entire back office. That means:
- Dedicated account managers who understand your business
- Real people on the phone; no robots or scripts
- Help to resolve broker issues and verify credit risks
At OTR Solutions, our team is trained in trucking, not just finance, so we can provide hands-on support when it matters most.
Value-Adding Partnerships
Another key variable to consider is whether the factoring company offers valuable partnerships with third-party vendors. Many partnerships open your business to more resources to further help your cashflow.
Technology & Tools That Actually Help
Factoring should do more than just fill financial gaps. It should enhance how you operate. Top-tier freight factoring companies offer tools that integrate with your workflow, like:
- Fuel advances
- Fuel Finder
- BASICs score monitoring
- Dedicated operations & accounts receivable teams
- 24/7 free broker checks
At OTR Solutions, every tool we build is created with one goal in mind: helping carriers so they can save time, manage risk, and grow sustainably.
Why Truckers Choose OTR Solutions
Truckers choose OTR Solutions because we’re the only company in the industry offering TRUE Non-Recourse Factoring. This means once you’re paid, you’re done. There will be no chargebacks, no matter what happens with the collection.
- TRUE Non-Recourse Factoring: Unlike standard non-recourse factoring, our TRUE Non-Recourse Factoring never requires you to pay back funding if brokers don’t pay. We assume 100% of the collection risk on approved loads.
- Dedicated Support Team: Every client gets assigned dedicated operations and accounts receivable team members. You’ll speak with the same people who know your business, not random call center agents.
- Integrated Technology: Our Mobile App and Client Portal work together seamlessly. Submit invoices, track payments, check broker credit, and access Fuel Finder technology all in one place.
- Fuel Savings: The OTR Fuel Card saves an average of $0.50 per gallon at 2,500+ in-network locations. Pair it with factoring for discounts on your factoring rate and streamlined cashflow management.
- Same-Day Funding: Get paid same-day on approved and processed invoices through our standard funding options. For even faster access, BOLT funding initiates instantly after invoice processing.
At OTR Solutions, we prioritize carriers so that they can maintain financial stability while focusing on what they do best: moving freight safely and efficiently.
Get Started with Freight Factoring Today
Powered by years of industry expertise, OTR Solutions is dedicated to providing carriers with the best non-recourse factoring solution. Get started with OTR Solutions today to secure your cashflow and scale your business with our tools tailored for truckers like you.
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