How freight factoring works

By the Owner Op Stack editorial teamPrices checked Nov 4, 2026How we rank

Quick answer

You sell a delivered load’s invoice to a factoring company. It pays you most of the invoice now (the advance), collects from the broker, then sends the rest (the reserve) minus its fee. RTS, for example, describes advancing more than 90% within 24 hours. source

Key takeaways

You get paid in hours or a day instead of waiting on broker terms.
The fee is a percent of the invoice. Published examples run 1.5%–3.5% (Bobtail typical range).
Recourse means you buy back unpaid invoices. Non-recourse means the factor takes the credit loss.
Read the contract for term length, minimums, reserves and the “must factor this broker” rule.

The 5 steps

Deliver the load and get the signed bill of lading.
Submit the rate confirmation and BOL in the factor’s app or portal.
Get the advance: same-day at most companies, and as little as 1 hour (eCapital) source or instant (OTR) source.
The factor collects from the broker on its normal terms.
You get the reserve, the remainder minus the fee. Some companies (Outgo) advertise no reserve. source

Worked example

Example math with a $3,000 invoice at a 2.5% rate and a 95% advance
Item	Amount
Invoice	$3,000
Advance (95%)	$2,850 now
Fee (2.5%)	$75
Reserve released later	$75 ($150 reserve − $75 fee)
You receive in total	$2,925

Recourse vs non-recourse

With recourse, if the broker doesn’t pay, you buy the invoice back. With non-recourse, the factor takes the loss when a broker can’t pay because of credit failure. TBS, for example, offers both. source Read the definition in your contract, because “non-recourse” usually covers credit failure only, not disputes.

Contract terms to check

Term and notice: Outgo states a 15-day cancel notice source. Bobtail moves to a long-term contract after 90 days source.
Broker rule: OTR requires you to keep factoring a broker once you’ve factored them, until released source.
Fees beyond the rate: wire, ACH, instant pay, fuel advances, minimums.

Compare total cost with the factoring fee calculator, then see 12 factoring companies compared.

Frequently asked questions

Is factoring a loan?

No. You sell an invoice, you don’t borrow against it. Your broker’s credit matters more than yours.

How much does factoring cost?

Published examples: Outgo 3% under $18K a month and 2.5% from $18K to $80K; Bobtail 1.5%–3.5% typical; Porter 1.5% for the first 60 days. Most companies quote privately.

What is a reserve?

The part of the invoice held back until the broker pays. It is released to you minus the fee.