Freight Factoring Glossary
22 freight factoring terms defined in plain language. Use the letter links to jump to any term. Each definition reflects how the term applies in MJN's factoring program.
A
Accounts Receivable
Money owed to a business for goods or services already delivered but not yet paid for. In trucking, accounts receivable are the unpaid freight invoices a carrier holds. Factoring converts these into upfront cash.
Advance Rate
The percentage of an invoice face value paid out immediately upon submission. MJN offers advance rates up to 95%. The remaining balance (minus the factoring fee) is released when the shipper pays.
B
Bill of Lading (BOL)
A legal document issued by the shipper that details the freight, its origin, destination, and terms of transport. Carriers must typically submit a signed BOL along with the invoice when factoring a load.
C
Carrier
A company or individual that physically transports freight. Carriers must hold operating authority (MC number) and active insurance. MJN vets carriers in real time for authority, insurance, safety status, and fraud risk.
F
Factoring Fee
The fee charged by a factoring company for advancing funds on an invoice. MJN offers a variable rate starting at 1.5% or a flat rate of 3% for 60 days, depending on which option the carrier selects. Rates are published in writing.
Flat Rate Factoring
A factoring fee structure where a fixed percentage applies to each invoice for a set period, regardless of how quickly the shipper pays. MJN offers flat-rate factoring at 3% for 60 days.
Freight Broker
A licensed intermediary who arranges the transportation of freight by connecting shippers with carriers. Freight brokers hold an MC authority and are regulated by the FMCSA. MJN Services holds MC# 375676.
Freight Factoring
Invoice factoring designed specifically for trucking companies, owner-operators, and freight brokers. The carrier submits a freight invoice after delivery, and the factoring company advances a percentage of the invoice value, often the same day.
Fuel Advance
A short-term advance on a load's value provided before delivery so the carrier can cover fuel costs. MJN offers fuel advances of up to 40% of the load value to vetted, established carriers.
I
Invoice Factoring
A form of accounts-receivable financing where a business sells unpaid invoices to a factoring company at a discount in exchange for upfront cash. The factoring company collects payment directly from the customer.
N
Non-Recourse Factoring
A factoring arrangement where the factoring company absorbs the risk of non-payment by the shipper. Non-recourse factoring typically carries higher fees than recourse factoring to compensate for the additional risk.
Notice of Assignment (NOA)
A document notifying a shipper or broker that the carrier has assigned the right to collect payment on an invoice to a factoring company. Once an NOA is in place, the shipper pays the factoring company directly.
O
Owner-Operator
A commercial truck driver who owns and operates their own equipment, either independently or leased to a carrier. Owner-operators are a primary audience for freight factoring because they carry the full cash-flow burden of waiting for shipper payment.
R
Rate Confirmation
A document from a freight broker confirming the agreed-upon rate for a specific load. Carriers submit the rate confirmation along with the invoice and BOL when factoring loads brokered through a third party.
Recourse Factoring
A factoring arrangement where the carrier remains responsible for the invoice if the shipper does not pay within the recourse period. MJN uses recourse factoring with a standard 60-day recourse period.
Recourse Period
The number of days a factoring company waits for a shipper to pay before charging the invoice back to the carrier. MJN uses a standard 60-day recourse period.
Reserve Account
The portion of an invoice held back by the factoring company until the shipper pays. Once payment is received, the reserve (minus the factoring fee) is released to the carrier.
S
Same-Day Pay
A factoring payout schedule where the factoring company issues the ACH payment the same day the invoice is submitted and approved. MJN issues your ACH the same day for invoices submitted by 1:00 PM MST.
Shipper
A company or individual that needs freight moved from one location to another. Shippers post loads, set rates, and are ultimately responsible for paying the carrier or freight broker for transport services.
Spot Factoring
Also called selective factoring, spot factoring allows a carrier to submit individual invoices for factoring without a long-term commitment. Carriers choose which loads to factor on a per-invoice basis.
U
UCC Filing
A Uniform Commercial Code filing that gives a factoring company a security interest in the carrier's receivables. UCC filings are a standard part of setting up a factoring account and are recorded publicly.
V
Variable Rate Factoring
A factoring fee structure where the fee adjusts based on how long the shipper takes to pay. MJN variable rates start at 1.5%, making it cost-effective when shippers pay quickly.
Factoring Glossary FAQ
What is freight factoring?
Freight factoring is a financing tool where a carrier sells an unpaid freight invoice to a factoring company in exchange for upfront cash. The factoring company then collects payment from the shipper. Carriers use factoring to cover fuel, maintenance, and operating expenses without waiting 30 to 60 days for shippers to pay.
How does MJN's recourse period work?
MJN uses recourse factoring with a standard 60-day recourse period. If a shipper has not paid within 60 days, the invoice is charged back to the carrier. This differs from non-recourse factoring, where the factoring company absorbs the non-payment risk. MJN's recourse structure allows MJN to offer lower rates.
What documents do I need to factor an invoice?
To factor a freight invoice with MJN, you submit the invoice, a signed bill of lading (BOL), and a rate confirmation if the load was brokered. MJN reviews the documents and, for submissions received by 1:00 PM MST, issues your ACH payment the same day.
Ready to Get Started?
Apply for MJN factoring today. Advance rates up to 95%, same-day pay, and rates published in writing. Call us directly or submit an application online.