The short answer
Compare freight factoring companies on total cost (rate plus every fee), advance and reserve, recourse terms, contract length and exit terms, whether you must factor every load, how fast they actually fund, and how they treat your brokers. Get everything in writing before you sign.
Choosing a factoring company is a decision you'll live with. Contracts can auto-renew, switching takes paperwork and the factor will be talking to your brokers on your behalf. This guide gives you a practical way to choose a factoring company for trucking, with the questions to ask and the red flags to avoid.
The 10 questions to ask every factoring company
- What's the rate, and is it flat or does it rise the longer a broker takes to pay?
- What percentage do you advance, and when is the reserve released?
- What other fees apply: ACH, wire, application, monthly minimums, termination?
- Is it recourse or non-recourse, and what exactly does non-recourse cover?
- How long is the contract, and how do I end it?
- Do I have to factor every load, or can I choose?
- How fast do you fund after I submit paperwork, including weekends and holidays?
- Do you offer broker credit checks?
- Do you offer fuel advances or fuel cards, and at what cost?
- Who handles collections with my brokers, and how?
Compare total cost on your real loads
| Item | Factor A | Factor B | Factor C |
|---|---|---|---|
| Rate | |||
| Advance % | |||
| Reserve release timing | |||
| Funding fees (ACH, wire) | |||
| Monthly minimum | |||
| Contract length and auto-renewal | |||
| Termination fee | |||
| Recourse terms | |||
| Estimated cost on one month of your invoices |
Fill in the last row using your actual invoice volume. The cheapest rate isn't always the cheapest factor.
Red flags
- Long contracts that renew automatically with a short cancellation window
- Fees that appear in the contract but weren't in the quote
- "Non-recourse" with very narrow covered reasons
- Pressure to sign the same day
- Unclear answers about how they contact your brokers
Contract terms to read twice
- Term and renewal: how long it lasts and how to cancel
- Termination fees: what you pay to leave early
- Exclusivity: whether you must factor all invoices
- Recourse period: how long before you must buy back unpaid invoices
- Lien release: how and when they release the UCC-1 and notice of assignment when you leave
Switching factoring companies
You can switch, but it requires a release letter from the old factor, a new notice of assignment to your brokers, and the old lien to be released or subordinated. Some factors handle the buyout of open invoices. Plan for it before you sign, by understanding the exit terms.
Factoring and your insurance
Most factors ask for your certificate of insurance and will want to see that your authority is active. Keep your truck insurance current and send new certificates when anything changes.
Ready to compare?
Start with what is freight factoring if you're new, then talk to two or three providers. FairlyCover can help you compare offers side by side. See get paid faster.
Questions truckers ask
What is a good factoring rate for trucking?
It depends on volume, broker credit and recourse terms. Compare total cost including every fee, not the rate alone.
Can I switch factoring companies?
Yes, but expect paperwork: releasing the notice of assignment and UCC lien. Check exit terms before you sign.
Do I have to factor all my loads?
Some factoring companies require it; others let you choose. Ask before signing.
How fast do factoring companies pay?
Many fund within one to two business days of complete paperwork. Ask about weekend and holiday funding.
Written by the FairlyCover Editorial Team. This guide explains how coverage generally works. It isn't legal or insurance advice, and your policy wording always decides what's covered. How we write and review content.
