Freight Factoring

A financing service where a carrier sells unpaid invoices to a third party for immediate cash.

Factoring companies purchase outstanding invoices from carriers at a small discount (typically 1%–5%) and pay within 24 hours. Two types exist: recourse (carrier liable if broker doesn't pay) and non-recourse (factor assumes credit risk). It solves cash-flow gaps when broker pay terms run 30–60 days.

How it is calculated

Factor Fee = Invoice Amount × Factor Rate %

Example

A $3,000 invoice factored at 3% pays the carrier $2,910 within 24 hours instead of waiting 45 days.