What is factoring in trucking? One invoice, followed from delivery to the last dollar

Factoring sounds like finance-office talk, but it's simple once you watch one invoice move. This page follows a single EXAMPLE load hauled by unit 102 of a three-truck fleet, from the rate confirmation to the last dollar, and explains each step in plain words.

The short version

A broker owes you for a delivered load and pays on its terms, often 30 days or more. A factoring company buys that invoice. It pays you most of it now (the advance), waits for the broker, then sends you what's left (the reserve) minus its fee. The factor takes on the waiting and the collecting. You get cash in time for fuel and payroll.

Unlike a loan, nothing is borrowed. The factor buys what you're owed RTS Financial, FAQsRTS Financial approval basisBased on your customers' credit, not your balance sheet; not a loan; limits depend on buyers' creditworthinessRTS Financial FAQ: freight factoring is not a loan; the capital is based on the credit of your customers, not your balance sheet, so there is no new debt. Funding limits vary with your business and your buyers' creditworthiness; with creditworthy buyers there may be no limit. RTS states 40+ years in financial services.RTS Financial, FAQs, 2026Checked Oct 2026Close, which is why approval leans on your brokers' credit more than on yours.

Worked EXAMPLE on a door panel: unit 102's invoice

UNIT 102 · INVOICE 1047

EXAMPLE

EXAMPLE: dry van, Indianapolis, IN to Nashville, TN, 290 miles

1LINEHAUL AGREED ON THE RATE CON

$1,150

2DETENTION, APPROVED BY THE BROKER

$75

3INVOICE TOTAL

$1,225

4ADVANCE, 92% (EXAMPLE RATE)

$1,127.00 · day 1

5RESERVE HELD BACK, 8%

$98.00

6FACTORING FEE, 2.5% (EXAMPLE RATE)

$30.63

7TRANSFER FEE, ACH (EXAMPLE)

$0 to $15, by contract

8RESERVE PAID TO YOU AFTER BROKER PAYS

$67.37 · about day 31

9YOU KEEP IN TOTAL

$1,194.37

Read the panel top to bottom. The broker owes $1,225. On day one the factor wires or sends $1,127 by ACH. On day 31 the broker pays the factor the full $1,225. The factor subtracts its $30.63 fee from the $98 it held back and sends the remaining $67.37. Unit 102's load cost $30.63 to turn a 30-day wait into next-day cash.

Notice of assignment and verification

Two checks happen before money moves.

The notice of assignment (NOA). When you start with a factor, it sends each broker you work with a letter saying your invoices have been sold and must be paid to the factor. This has legal weight: under UCC 9-406, once a broker receives a proper notice, it can only clear the debt by paying the factor UCC 9-406 (Cornell LII)Notice of assignment (UCC 9-406)After an authenticated notice, the account debtor can discharge the debt only by paying the assigneeUCC 9-406(a): before notice, an account debtor (the broker) may pay the assignor (the carrier). After receiving an authenticated notice that the account was assigned and payment is to go to the assignee (the factor), it can discharge the debt only by paying the assignee. 9-406(c): on request, the assignee must give reasonable proof of the assignment, or the debtor may keep paying the assignor. States adopt the UCC with their own changes.UCC 9-406 (Cornell LII)Checked Oct 2026Close. That's why brokers rarely pay the wrong party twice, and why you shouldn't ask one to pay you directly after you've started factoring.

Verification. On a first load with a broker, or a large invoice, the factor may call or email the broker to confirm the load delivered and the amount is right. It's a short check, but it's the step most likely to slow a first funding. Clean paperwork keeps it short.

What a verification call usually confirms:

• The load number and rate match the rate confirmation
• The load delivered without a claim or dispute
• Any extra charges (detention, lumper, layover) were approved
• Payment will go to the factor's address

How long each step takes

Timing depends on the factor, your paperwork and the broker. Here's what's published and what's EXAMPLE:

Uploads late in the day often fund the next business day at any factor, since banks process transfers on their own schedules. Ask your factor for its exact cutoff.

The fee, explained

The fee is what you pay for speed and collections. It's usually a percentage of the invoice face value, sometimes tiered by how long the broker takes to pay. The trade ranges published in 2026 run about 1.5% to 3.0% per invoice for recourse factoring and 2.5% to 5.0% for non-recourse FreightWaves (contributed), …Freight factoring rate and fee ranges (trade coverage)Recourse 1.5-3.0%, non-recourse 2.5-5.0% per invoice; ACH $2-15, wire $10-35FreightWaves contributed article, July 1, 2026: recourse 1.5% to 3.0% per invoice, non-recourse 2.5% to 5.0% (spot non-recourse 3% to 6%); ACH $2 to $15 and wire $10 to $35 per transfer; expedited funding 0.25% to 1.0%; credit checks $10 to $50 per customer; setup $100 to $500; minimum-volume penalties $250 to $1,000+ a month; early termination $500 to $5,000+. Ranges from industry sources, not a survey.FreightWaves (contributed), Jul 1, 2026, 2026Checked Oct 2026Close. Those come from industry sources, so treat them as a sanity check on a quote.

Fees that can sit on top of the rate: ACH or wire charges per payment, a monthly minimum, setup or credit-check charges, and early termination fees. A rate that looks low with five add-ons can cost more than a higher flat rate. Our factoring rates page shows how to add them up per month.

When the broker doesn't pay

This is where recourse matters.

• Recourse factoring: if the broker doesn't pay within the contract's window, the invoice comes back to you. The factor deducts it from future advances or reserves.
• Non-recourse factoring: the factor takes the loss if an approved broker can't pay because of a credit event, such as bankruptcy. RTS Financial states it provides non-recourse factoring on that basis RTS Financial, trucking fact…RTS Financial recourse termsNon-recourse: RTS assumes the credit risk if the customer can't pay because of insolvency or bankruptcyRTS Financial trucking factoring page: RTS provides non-recourse factoring, assuming the credit risk if your client doesn't pay, and defines non-recourse as covering a customer that can't pay because of issues like insolvency or bankruptcy. Disputes and paperwork problems are not described as covered.RTS Financial, trucking factoring, 2026Checked Oct 2026Close. It still won't cover a load the broker disputes because of a claim, a late delivery or a paperwork problem.

My view after years of watching invoices: for a small fleet, the broker credit checks a factor runs before you book are worth as much as the recourse label. A broker the factor won't approve is a broker you shouldn't haul for on credit.

Where factoring fits in a growing fleet

At one truck, factoring is often the reason the truck keeps moving in the first few months. At three to five trucks, it's how payroll for several drivers gets paid on Friday while invoices sit with a dozen brokers. Read the freight factoring guide for fleets for the full offer, the documents a factor needs and how brokers see it.

This page explains how factoring generally works. It isn't legal or financial advice; your contract sets your actual terms.