What Is Factoring in Trucking?

September 22, 2025 Updated: March 19, 2026

Factoring in trucking is a financial service where carriers sell their unpaid freight invoices to a factoring company in exchange for fast cash. Instead of waiting 30 to 90 days for shippers and brokers to pay, you receive an advance of up to 95% of the invoice value within one business day. The factoring company then collects payment from your customer and remits the remaining balance minus a small fee.

This is not a loan. You are selling a receivable you have already earned by delivering freight. There is no debt on your balance sheet and no monthly payments to manage. For the thousands of owner-operators and small carriers who run on tight margins, factoring provides the cash flow predictability needed to keep trucks moving. At MJN Services, we have funded 26,000+ loads (as of 2026) for carriers across the United States.

How Does Freight Factoring Work?

The freight factoring process follows a simple cycle that repeats with every load:

Deliver the load. You haul freight as usual and obtain a signed bill of lading.
Submit your invoice. Send the invoice and delivery documents to your factoring company.
Receive your advance. The factoring company pays you up to 95% of the invoice amount. At MJN Services, invoices received by 1:00 PM MST are paid the same day, with MJN issuing your ACH payment the same day you submit.
Customer pays the factor. When the invoice comes due (typically 30 to 90 days), your customer pays the factoring company directly.
Receive the balance. The factoring company sends you the remaining percentage minus their fee.

Most factoring companies also run credit checks on your customers before you accept a load. This helps you avoid hauling freight for shippers who have a history of late or missed payments. At MJN Services, carriers are vetted in real time for authority, insurance, safety status, and fraud risk.

Who Should Use Freight Factoring?

Factoring is most valuable for carriers who face a timing gap between expenses and revenue. Consider factoring if:

You are a small to mid-sized carrier or owner-operator with daily expenses (fuel, maintenance, insurance) but payment terms of 30 to 90 days
Cash flow is limiting your growth because you cannot accept new loads without capital to cover operating costs
You are new to trucking and do not have the cash reserves to absorb long payment cycles
Administrative overhead is high from chasing payments and running credit checks on customers

Factoring may be less necessary if you have significant cash reserves or if your customers consistently pay within 10 to 15 days. For most growing carriers, the predictability of factored cash flow outweighs the fee.

With 39,000 approved carriers in our network (as of 2026), MJN Services works with carriers at every stage, from single-truck owner-operators to mid-sized fleets.

What Does Trucking Factoring Cost?

Factoring fees vary but typically range from 1.5% to 5% of the invoice value. Several factors determine your rate:

Invoice volume: More invoices per month usually means a lower rate per invoice
Customer creditworthiness: Established shippers with good payment histories reduce the factoring company’s risk
Payment terms: Shorter terms (30 days) cost less than longer terms (90 days)
Recourse vs. non-recourse: Non-recourse factoring, where the factor absorbs the risk of non-payment, costs more

At MJN Services, our factoring programs offer rates as low as 1.5% with advance rates up to 95%. We publish our complete fee schedule. No surprise charges for setup, credit checks, or ACH transfers.

When evaluating cost, compare the factoring fee against the cost of waiting. Late fuel purchases, missed load opportunities, and strained carrier relationships all carry a price. Many carriers find that factoring more than pays for itself through improved cash flow and load volume.

What Are the Risks of Factoring?

Factoring is a well-established financial tool, but it is important to understand the trade-offs:

Fees reduce your margin. A 1.5% to 5% fee on every invoice means your effective rate per load is slightly lower. Factor this into your per-mile calculations.
Recourse risk. With recourse factoring, if your customer does not pay within the agreed period (typically 60 days), you may be responsible for the invoice. MJN Services offers both recourse and non-recourse options.
Contract terms. Some factoring companies require long-term contracts or minimum monthly volumes. At MJN Services, initial contracts start at 3 months so you can evaluate the partnership before committing long-term.
Customer notification. Your customers will know you use a factoring company because payments are redirected. This is standard practice in freight and rarely causes issues.

The key to managing these risks is choosing a factoring partner with transparent terms, industry experience, and flexible contract structures. MJN Services has served the trucking industry for 26+ years and understands the realities carriers face daily.

How Do You Choose a Factoring Company?

Not all factoring companies are the same. When evaluating partners, look for:

Freight industry experience. A company that understands trucking knows about BOLs, load boards, and carrier compliance. General-purpose factoring companies may not.
Transparent fee structure. Ask for a complete fee schedule including factoring rates, ACH fees, credit check fees, and any minimum volume requirements.
Advance rate. The percentage you receive upfront matters. Look for advance rates up to 95%, which is the industry standard at established companies like MJN Services.
Speed of funding. How quickly do they process invoices? At MJN Services, invoices submitted by 1:00 PM MST are paid the same day via ACH.
Customer service. Can you reach a real person when you need help? At MJN Services, carriers and agents speak directly with owners and decision-makers, not call centers.
Flexible terms. Avoid companies that lock you into multi-year contracts or require you to factor every invoice.

For a detailed comparison of factoring versus broker quick pay programs, see our guide on factoring vs. quick pay.

Frequently Asked Questions

What is freight factoring in simple terms?

Freight factoring is when a trucking company sells its unpaid invoices to a factoring company in exchange for fast cash. Instead of waiting 30 to 90 days for shippers or brokers to pay, you receive an advance of up to 95% of the invoice value within one business day. The factoring company then collects payment directly from your customer and remits the remaining balance minus a small fee.

How much does trucking factoring cost?

Trucking factoring fees typically start as low as 1.5% of the invoice value. The exact rate depends on your monthly volume, your customers’ creditworthiness, and whether you choose recourse or non-recourse factoring. Higher invoice volumes usually qualify for lower rates. At MJN Services, rates start as low as 1.5% and simple, published rates.

Is factoring a good idea for truckers?

Factoring is a good fit for most small to mid-sized carriers who need predictable cash flow. If you are waiting 30 or more days for payment while covering fuel, maintenance, and payroll, factoring bridges that gap. The fee is typically 1.5% to 5% of the invoice, which many carriers find worthwhile compared to the cost of delayed payments and missed load opportunities.

How quickly do you get paid with factoring?

Most factoring companies pay within one to two business days. At MJN Services, invoices received by 1:00 PM MST are paid the same day, with MJN issuing your ACH payment the same day you submit. This gives carriers a predictable cash flow timeline they can plan around for fuel, maintenance, and payroll expenses.

What is the difference between recourse and non-recourse factoring?

With recourse factoring, you are responsible if your customer does not pay within the agreed period. With non-recourse factoring, the factoring company assumes the risk of non-payment, but charges higher fees to compensate. MJN Services offers both options so carriers can choose based on their risk tolerance and customer relationships.

Ready to stop waiting for payment? Explore our factoring programs to see advance rates, fees, and how to get started, or contact us to speak with our team. With 26+ years serving the trucking industry and 127,000+ loads brokered (as of 2026), MJN Services has the experience to keep your trucks moving.