A Complete Guide to Truck Factoring

July 4, 2022
Minnu Gupta
Data Scientist
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There are a lot of moving parts in the trucking industry (literally) and it can make payments complicated as well as untimely. Factoring is a solution that ensures better cash flow and reduces the time you have to wait to get paid for delivering a load. 

But it can sound complicated, so this article can provide the information in an easy-to-understand way so that you can decide if factoring is the right option for you.

What is Truck Factoring?

When invoicing for freight delivery, the person receiving the shipment has to pay the trucking company. They sign the freight invoice showing that they have received and accepted the load and will pay the trucking company or owner for the transportation of the goods. So you get paid, right?

Well, unfortunately it can take days, weeks, or even months before you actually have the payment in your bank account. But your business probably needs those funds to pay a dispatcher, get another load, pay for gas, and keep operations smooth. That’s where factoring comes in. 

Factoring allows you to get your payments quickly and pass the invoices along to another company. Factoring companies basically charge a certain percentage of the payment amount to take care of collections and the hassle of dealing with the invoice. They may also charge other fees depending on the services you want so you are trading off the total amount for the delivery of the load, but get the cash faster for better cash flow that can keep operations smooth. 

How Does Factoring Work?

The factoring procedure that allows you to sell your invoices isn’t complicated, but knowing how it works for you can help you decide if it's the right route for your business. There are a few steps of the process of factoring. 

Delivery of Loads

Just like normal, your driver will deliver the load to the customer who will sign the invoice to accept the load and signify that they received it on time. 

Sending of Invoice

Next, your driver will copy the invoice and send it to the factoring company. Nauvus Factoring makes this easy because everything is on one easy to use app along with business management tools and other features. 

Fees and Payment

Once the factoring company receives the invoice, they will advance a percentage of the value up to 98%, but in some cases they may charge 3% or more. They will usually pay out within a few days. Nauvus Factoring always charges 2% and pays out within 24 hours, so you know you will have the cashflow you need to run your business. 

Collection and Processing

The factoring company will take care of the rest including collecting payment and processing accounts receivable. You never have to worry about late payments and can get back to operating your trucking business. 

Types of Factoring:  Recourse and Non-Recourse 

When choosing factoring services, you must consider whether it is non-recourse or recourse factoring. The difference may seem minor, but can mean a whole lot in some scenarios. 

Recourse Factoring 

Recourse factoring has the benefit of lower percentage fees, which means you get more money from each load. However, as the name suggests they can seek recourse from your customers that do not pay. In that situation, you must buy back the invoice from the factoring company, which can be detrimental to your company cash flow. Then, you have to collect payment yourself anyway, which is the whole reason you sought out factoring companies to begin with. 

Non-Recourse Factoring

Non-recourse factoring means that you are never liable for customers that don’t pay. The downside is that these factoring companies take larger percentages of the value of the invoice for your load. This means littler profits, but can  be highly beneficial for customers that take too long to pay or don’t pay at all in rare instances. Nauvus Factoring is non-recourse, which means you never have to buy your invoices back so you always have peace of mind. 

Pros and Cons of Freight Factoring

Many trucking companies rely on freight factoring to ensure the flow of cash needed for their business management. For many, the pros far outweigh the cons, but every business is different and it can help to see clearly what the benefits and downsides of factoring are so you can determine whether it's right for you. 


  • Faster payment - Obviously at the most basic level, factoring means faster payment. When you don’t have to wait 30 to 90 days for funds to use to maintain your fleet, purchase fuel, and pay employees, everything can move smoothly. 
  • Less Stress -  You aren’t the only one who stresses over late payments or chasing down unpaid invoices. Going through a factoring company means they have to deal with all that stress and frustration, leaving you free to manage your fleet the way you want
  • No Debt - Since you pay for factoring services out of the invoice itself, you never have to worry about going to debt just to receive your money for delivering a load 
  • Online Service - With services like Nauvus, you don’t have to use paper invoices and can simply use the app to submit invoices online and get paid within 24 hours. Plus, you and your drivers can access it from anywhere at any time. 
  • Better Growth - With better cash flow and more time to manage other aspects of your business, you can grow into a bigger business with a larger fleet.


  • Take Percentage of Payment - Factoring requires you to give up some of the money you and your fleet earned. This fee depends on the factoring company you use and can be as high as 3%. Nauvus Factoring always charges low 2% fees no matter how much you earned for the load. 
  • Hidden Fees - You may be surprised to find out that some factoring companies have hidden fees and charges. This can be a hassle and negatively impact your budget. Nauvus never has hidden fees, so you can always count on 98% for every factored load. 
  • Liable for Payment - You may be liable for payment if your customer doesn’t pay the factoring company. If you are in a recourse agreement, then you may be liable for unpaid invoices after a certain amount of time. Nauvus Factoring is non-recourse, so you don’t have to worry about this downside. 

Is Factoring Right For Your Trucking Company?

Not every trucking business needs factoring services and some work just fine without needing faster payments, but they must plan around wait times for invoice payments. For the price, though, many owners and operators feel that factoring is more than worth it because it can upgrade your company and fuel faster growth. You just have to weigh the pros and cons and decide if it's right for you. 

With Nauvus Factoring services you never have to worry about high or hidden fees and always receive your money within 24 hours. Plus, you can also use Nauvus Connect to get even more benefits like discovering the best loads and access to an experienced dispatcher. 

Click here to sign up for the Nauvus waitlist to be one of the first to boost your revenue by simplifying your trucking operations. 

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