What is Factoring?
Getting paid shouldn’t mean waiting for brokers to process invoices. Factoring turns completed loads into immediate cash, so you can keep your trucks rolling and your business growing without the stress of slow payments.
Factoring explained.
Freight factoring is a financial service that helps trucking businesses get paid faster. Instead of waiting on brokers or shippers to settle invoices, carriers sell those invoices to a factoring company like OTR Solutions for immediate payment. The factoring company then collects from the broker, keeping cashflow steady and operations running smoothly.
How does factoring work?
Factoring simplifies the payment process so you can focus on moving freight, not chasing down invoices. Here’s how it works:
Find, load, and haul freight
Carry a load from a broker who is approved on the OTR Broker Check tool and obtain proper documentation.
02. Submit invoices and get paid
Upload your rate confirmation and proof of delivery to the OTR Client Portal / Mobile App. Once approved, we initiate payment to your bank account.
03. We invoice
Instead of sending invoices directly to every broker you work with, after you upload an invoice to OTR, we invoice your broker within 24 hours on your behalf.
04. Broker pays us
OTR’s in-house accounts receivable team tracks invoices waiting for payment and collects that payment when it’s due.
What are the different types of factoring?
Without Factoring
Without factoring, slow broker payments create cashflow gaps, making it harder to cover expenses, take on new loads, or grow your business.
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With Factoring
With factoring, you receive payment within 24 hours, skip the hassle of collections, and keep operations running smoothly.
Learn more about factoring with OTR Solutions.
See how factoring helps trucking businesses stay cashflow strong and focused on growth.
Have more questions?
Learn everything you need to know about how factoring works, what it costs, and how it helps your business thrive.
We have found that many carriers operate on a month to month, week to week, or even day to day basis with their available funds. This makes waiting 30, 60, and even 90 days to get paid on invoices incredibly difficult. Cash is flowing in and out at different times, and many carriers need access to their earnings sooner than that to be able to pay bills, employees, or even pay themselves.
Factoring gives a reliable source of income, so you can maintain access to your payments in a timely manner while letting the factoring company handle your back-office.
We highly recommend all new authorities look for TRUE Non-Recourse factoring when they are first starting out. Most factoring programs will leave the collections process and liability to the carrier – meaning that you will need to handle the communications with the broker or shipper after you deliver the load to ensure the payment is sent. This can take a long time and can be risky – where if the broker for whatever reason cannot pay, then you’re pretty much out of luck.
However, for TRUE Non-Recourse clients, once you submit an invoice and get paid – that money is yours to keep and you can focus on your next load rather than the paperwork and collections for your previous work. The rest of the collections process and all risk of non-payment is put on the factoring company, not you.
No credit check is needed. We ask for documents such as proof of insurance, articles of ownership, and operating authority.
Not all factoring companies are created equal – and like many other things, there can be some companies who aren’t as transparent as others. Make sure to check online reviews and that the factor is an approved member of the International Factoring Associations (IFA) which creates the standards for best factoring practices. Before you sign agreements, always make sure to look out for:
- Contract length
- Factoring amount minimums
- Chargeback terms
- Collection terms
- Tiered rates
- Buyout possibilities
- Other tools that come with the factoring program
- Mobile app / web portal that you’ll be interacting with
- Funding methods
Not sure what exactly to look for? OTR will review anyone’s contract and explain the terms at no charge, whether you factor with us or not. We’re here to help you understand the terms of your agreement.
No – we do not have any minimums in our contracts. You can factor as many invoices as you want. You can factor some brokers and not factor others.
Once you fill out an inquiry form our team will reach out to you within 24 hours. The signup process only takes a few minutes and you can be factoring your first invoice that very same day.
Quick Pay vs. Freight Factoring is more a game of reliability and consistency than which is faster. OTR Solutions True Non-Recourse factoring program gets you paid in 24 hours or less. Quick Pay programs pay in 1-5 days, typically for higher rates and brokers can change your rate at any given time without notice.
Additionally, unlike factoring with OTR Solutions, Quick Pay does not give you the ability to track the broker’s receipt of the invoice, invoice approval, or status of your payment. Factoring with OTR gives you transparency in every step of the process without sudden changes in your rate or payment times. Working with a factor means you have one place to call to manage all of your freight payments.
Freight is the transportation of goods from the original destination to the target destination. Typically, a shipper (think big box stores needing to move goods from a warehouse to smaller distribution centers) will work with a freight broker to facilitate the transportation of their goods. Then, a freight broker will post specific loads on a load board so that carriers can find and sign up to carry that load from the origin to the destination.
A smart move in the right direction.
New to the business or expanding your fleet, we only succeed when you do. We’ll bring the tools and support. You bring the hustle. Let’s move forward together.