What's the Difference Between Non-Recourse and Recourse Freight Factoring?
Updated: May 11
Factor + consistent cash flow = happy trucker
As an owner of a trucking company, you need steady cash to keep operations running and the comfort of knowing you won't miss a payment. You can find this comfort in freight factoring. There are two different types of freight factoring programs: non-recourse and recourse.
You wouldn't make an investment in something without fully understanding what you're getting into. But truck drivers are constantly signing up with freight factoring companies without knowing the difference between non-recourse and recourse factoring. We are here to clear that up!
Both non-recourse and recourse freight factoring gets you paid within 24 hours for a fee (recourse fees tend to be slightly lower because you share the risk with the factoring company when a customer doesn't pay).
What is non-recourse freight factoring?
The factoring company incurs all the risk. If a broker or shipper doesn't pay or goes out of business, the factoring company will take the fall. You don't need to worry!
There is no reserve - you receive 100% of your money up front when you send your bills in
No charge backs
The factoring company will handle all your billing and collections for you
All you need to do is run an approved load and send in the appropriate paper work - it's that easy.
What is Recourse Freight Factoring?
If a broker doesn't pay the factor, your trucking company is responsible and will take the hit for it. You will have to pay the factor for that payment.
There will be a portion of your fund held in reserve until the customer pays
You fleet is responsible for collections if the shipper or broker doesn't pay in the allotted time
You are responsible for your billing when sending in bills (unless you sign up for a recourse with billing program)
Both programs also offer the additional benefits and services like credit checks on the brokers and shippers you use, free fuel cards, and help with freight finding.