Freight factoring glossary

Factoring agreements use finance words for simple ideas. Each definition below says what the term means for your trucks and, where it applies, how FFS handles it.

Factoring basics

Freight factoring

Selling your freight invoices to a factoring company so you get paid now instead of waiting 30 days or more for the broker. The factor pays you most of the invoice right away, then collects the full amount from the broker. It isn’t a loan. You’re selling money you already earned. More on how it works.

Factor

The factoring company, which buys your invoices, pays you and collects from your brokers.

Spot factoring

Factoring only the invoices you pick, instead of every invoice from every customer. Some factors require you to factor your whole book. At FFS, you choose which invoices to factor.

Client portal

The website where you upload invoices and BOLs, request funding and see what’s been paid. FFS clients log in at ffs.factorview.com.

Paperwork

Bill of lading (BOL)

The shipping document that lists what was loaded. The shipper and driver sign it at pickup, and the receiver signs it at delivery. The signed delivery copy is your proof the load was delivered. Factors need it to fund you, and a missing signature can hold up payment.

Rate confirmation (rate con)

The broker’s document confirming the load, the pickup and delivery details and the rate you’ll be paid. You send it to your factor for a fuel advance, and your invoice should match it.

Invoice

Your bill to the broker or shipper for a load you hauled. It’s what a factor buys.

Notice of assignment (NOA)

A letter telling a broker to pay your factor instead of you. Once a broker has it, the broker sends payment to the factor. At FFS, once a customer is set up, that customer pays FFS on every invoice, and FFS passes through the payments on invoices you didn’t factor.

UCC filing

A public filing under the Uniform Commercial Code that gives notice of a factor’s claim on your receivables. It often covers all your invoices, not only the ones you factor, and can name other business property. Check your agreement to see what it covers. Factors commonly file one when you sign up. If you switch factors, the old factor releases its filing once your account with it is settled.

MC number and DOT number

The numbers the Federal Motor Carrier Safety Administration (FMCSA) issues to identify your company and your operating authority. Factors use them to look up your authority, insurance and safety record.

Certificate of insurance (COI)

A document from your insurance company that proves your trucking coverage. Factors ask for it when you sign up.

W-9

The IRS form that gives your business’s legal name and taxpayer ID number. Factors need it for their records.

To sign up with FFS, have your MC and DOT numbers, a W-9, your certificate of insurance and a voided check or bank letter ready, plus your signed agreement.

Fees and funding

Advance

The share of the invoice you get paid when you’re funded. New carriers at FFS get a 97.1% advance.

Advance rate

The advance written as a percentage of the invoice. A higher advance rate isn’t always more money. What you keep in the end is the invoice minus every fee, so compare the total fees in dollars.

Factoring fee

What the factor charges to buy an invoice, usually a percentage of the invoice amount.

Flat fee

A factoring fee that stays the same no matter how long the broker takes to pay. The alternative is a tiered fee that grows the longer the invoice goes unpaid. New carriers at FFS pay a 2.9% flat fee.

Reserve

The part of an invoice some factors hold back until the broker pays, then release to you minus the fee. At FFS, the 97.1% advance and the 2.9% flat fee for new carriers add up to the full invoice.

Rush funding

Paying you faster than standard funding, usually for an extra charge. At FFS, rush requests fund within 60 minutes for a flat $40 processing fee.

Same-day funding

Funding on the day you send your paperwork. At FFS, standard requests are ready to fund same day.

Cutoff time

The time of day after which a factor treats new paperwork as the next business day’s. Ask every factor for theirs.

Verification

The factor checking with the broker that the load was delivered and the invoice is good, before it pays you.

Minimums and invoice fees

Some factors require you to factor a minimum amount each month, or charge a fee on every invoice you send. FFS has no minimums and no invoice fees.

Risk and brokers

Recourse factoring

You buy back a factored invoice if the broker never pays it. It’s the most common arrangement in trucking and usually costs less. FFS factors with recourse by default.

Non-recourse factoring

The factor takes the loss if a broker never pays, usually only when the broker is insolvent or bankrupt, and usually for a higher fee. FFS offers non-recourse on request. Recourse vs. non-recourse, compared.

Chargeback

When a factor takes back the money for an invoice that a broker never paid, under recourse factoring. Factors often take it out of a future funding.

Broker credit check

Looking up a broker’s or shipper’s credit and payment history before you haul for them, so you can turn down a bad payer before you book. FFS runs these checks for free.

Days to pay

How long a broker takes, on average, to pay an invoice. Slow payers are the ones worth factoring.

Quick pay

A broker paying you early on its own loads, for a fee taken out of the load. Factoring vs. quick pay, compared.

Fuel

Fuel advance

Part of a load’s pay sent to you at pickup, before you deliver, to cover fuel for the trip. At FFS, you send the rate confirmation and pickup BOL. Once we verify them, up to 40% of the invoice goes to your FFS fuel card or a Money Code within 60 minutes, 7 days a week from 8 am to 10 pm ET. Fuel advances.

Money Code

A one-time code a driver uses at a fuel stop to pay for fuel or get cash, without needing a card in hand.

Fuel card

A card for buying fuel, often with a discount off the pump price. FFS fuel cards are free, have no monthly fees and work at 14,000+ locations across North America. Fuel cards.

Questions about a term in your quote? Call (813) 773-4002 and a real person will explain it, or get a quote.