How does factoring work:
The steps to working with a factoring company are fairly straightforward, allowing even the busiest companies to rely on the financial service.
The steps are as follows:
- After delivering a load, the trucking company submits the invoice along with delivery documents to the factoring company of its choice
- The factoring company then verifies the invoice and pays the carrier an upfront percentage (typically between 70-85%) of the invoice value.
- The factoring company will then take over the invoice and collect the full payment directly from the broker or shipper
- Once the factor receives the full payment, they deduct their fee and send the remaining balance to the trucking company
This process allows trucking companies to receive cash quickly, typically within 24 hours, instead of waiting the usual 30 to 90 days for brokers to process payments.
Who Benefits from Factoring:
In trucking, delayed broker payments, fuel price volatility, and unexpected maintenance can create cash gaps even for profitable carriers. Factoring is often used to stabilize cash flow during growth periods, seasonal surges, or when onboarding new brokers with longer payment terms.
Factoring in trucking primarily benefits small-to medium-sized carriers, owner-operators, and startups. By providing immediate cash flow, small companies can cover business expenses quickly and without hassle.
Partnering with a factoring company allows fleets to avoid debt, manage cash flow, and take on more loads without being restricted by financial constraints.
Additionally, new trucking companies with limited credit history can benefit from factoring by gaining quick access to funds to help them grow their business.
While smaller companies are often seen as the primary beneficiaries of factoring, any carrier can benefit from these financial cushions.
For example:
- Carriers with high operating costs might consider using a factoring company to cover fuel, insurance, or maintenance expenses without relying on bank loans.
- New entrants, as they get their handle on cash flow, navigate their first few contracts along with bills
- Carriers with industry timing issues that conflict with internal budgeting needs
Key Considerations Before Choosing a Factoring Partner
Choosing a factoring partner is a material financial decision, especially for carriers operating on thin margins. Carriers should evaluate factoring fees, recourse terms, and contract flexibility to ensure that choosing this solution aligns with their operating margins.
For example, non-recourse factoring can reduce credit risk, while recourse options may offer lower fees depending on the carrier’s risk tolerance.
At RTS Financial, client trust is the highest priority, which is why they promise 24/7 pricing transparency. RTS Financial factoring provides trucking companies with same-day cash advances of up to 97% of the invoice value, which is significantly higher than industry norms. RTS offers same-day funding, flexible contract options, and operational tools designed specifically for trucking workflows.
Andrey Rios, a business development manager at RTS, states that the number one consideration carriers should focus on is building trust.
“It doesn’t matter if your company is big or small, communication and transparency are the most important factors to consider when choosing a factoring company.
Even if there is news that you don’t want to hear from us, that isn’t great, we still are going to deliver the notes because we want to build trust between our company and theirs.”
According to Andrey Rios, transparency and proactive communication are foundational to long-term career relationships.
Not only does RTS handle your financial services needs, but you can also count on their responsive, expert representatives, who have more than 30 years of industry experience.
Key benefits of partnering with RTS include:
- Same-day funding on approved invoices
- High advance rates compared to industry averages
- Non-recourse options
- No long-term contract requirements
- Fuel cards and broker credit tools
- Dedicated account support with trucking-specific expertise
Our Founder at Dakota Group operated with RTS as a factoring partner from the start. It is critical to work with the right factoring partner to guide you through the process based on your cash flow needs.
RTS emphasizes pricing transparency, responsive account support, and clear communication throughout the funding and collections process. This ensures you feel valued and informed every step of the way.
Dakota Group specializes in helping all commercial vehicle owners and carriers navigate this landscape, where numerous DOT and FMCSA compliance requirements apply. We know how stressful it can be, so whether you are registering for the first time or maintaining ongoing compliance, we are here for you and your business. We are passionate about keeping our clients focused on their operations, so allow us to manage your filings and ongoing compliance needs to keep you, your business, and your fleet in motion.
This guide is for informational purposes only and does not constitute legal advice. Regulations change – always verify current requirements with FMCSA or consult with a compliance professional.
