How Freight Factoring Works (With Example)

With freight factoring you sell your delivered-load invoices to a factoring company, which advances most of the amount quickly, collects from the broker or shipper, and keeps a fee.

By TruckerStack Editorial, AK Digital Marketing LLC · Reviewed against eCFR and FMCSA pages on 2026-11-04 · Editorial policy

The flow

1. Deliver and upload the rate confirmation, BOL and invoice.
2. The factor verifies the load and pays an advance.
3. The broker pays the factor (you'll sign a notice of assignment).
4. The factor releases the reserve minus its fee.

Worked example (illustrative numbers)

Invoice $2,000. Assume a 90% advance and 3% fee: you get $1,800 now; when the broker pays, the factor releases $200 − $60 = $140. Total received $1,940. Enter your real fee in the hot shot or box truck calculator.

Terms that matter

• Recourse vs non-recourse: who carries the loss if the broker doesn't pay, and in which cases.
• UCC-1 lien: the factor files a lien on receivables; know its scope.
• Contract term and exit: notice period, termination fees, release letter.
• Extra fees: ACH/wire, minimums, invoice fees.

Compare providers with transparent criteria in our factoring comparison. Back to factoring & insurance.

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