Factoring 101: How Carriers Get Paid Faster

Brokers pay on net-30 to net-45. Trucks don't run on net-30. Here's how factoring closes that gap.

A shipper hires a broker. The broker hires a carrier. The carrier hauls the load, drops it off, and submits paperwork. And then, in most cases, the carrier waits 30 to 45 days for the broker to pay the invoice. Trucks don't run on net-30. That's where factoring comes in.

What factoring is

A factoring company buys the freight invoice from the carrier for a discount — typically a few percent — and pays the carrier within 24 hours. The factor then collects from the broker on the original net-30 or net-45 schedule. The carrier trades a small percentage of the invoice for fast, predictable cash flow.

Why it matters for hot-shot

• Fuel and driver pay are weekly expenses. Revenue needs to match that cadence.
• Cash flow stability lets a carrier accept good loads without worrying about a broker's payment terms.
• Factoring companies also vet broker creditworthiness, which reduces the risk of getting stiffed on a load.

Recourse vs. non-recourse

Recourse factoring is cheaper but the carrier is liable if a broker doesn't pay. Non-recourse factoring is slightly more expensive but the factor absorbs the loss. Professional fleets generally use non-recourse for any broker they haven't worked with for years.

What this means for an investor

Factoring is one of the line items inside the Grand Line management fee. It's not an extra charge on the weekly settlement — it's built into how the operation runs. The benefit shows up in the rhythm of the weekly statement: paid on a Friday-through-Thursday cycle, every cycle, on time.