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What freight factoring is, how it works, recourse vs non-recourse factoring, and how to evaluate factoring companies as a small carrier.
Cash flow is the number one challenge for small carriers and owner-operators. Freight factoring converts your receivables into immediate cash — but not all factoring companies are equal.
When you deliver a load, you submit your invoice to the factoring company instead of waiting for the broker to pay. The factor advances you 90–97% of the invoice value — usually within 24 hours. They then collect payment from the broker and keep the remaining 3–10% as their fee.
| Type | If broker doesn't pay? | Typical rate |
|---|---|---|
| Recourse | You owe the advance back | 1.5%–3% |
| Non-Recourse | Factor absorbs loss (with conditions) | 3%–5% |
Non-recourse sounds safer, but most non-recourse factors only cover non-payment due to broker bankruptcy — not load disputes. True non-recourse protection is rare and expensive.
IZY Logistics is a licensed freight broker (MC #1615290) serving shippers across the United States. Get an all-in freight rate within 1 hour.
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