What is Freight Broker Factoring?

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The gap between delivering freight and getting paid shouldn't be significant. Luckily, you can get paid instantly by using freight broker factoring.

Keep your business running on the capital you've already created. Stop relying on buffers created from credit and loans. Focus on running your business and, ideally, growing it, instead of chasing down payments, leaving you light on resources when opportunities do arise.

Freight broker factoring has been around for decades and has helped many freight brokerages grow instead of stagnating.

What is Freight Broker Factoring?

While 40 days is the standard amount of time to get paid in the freight industry, selling your invoices to a factoring company allows you to get paid immediately.

Sure this is convenient, but what's the cost to your business? Most companies that specialize in factoring for freight brokers charge a flat rate per invoice factored, usually between 2-5%.

How Factoring for Freight Brokers Works

The terms of your factoring agreements depend on the outcome of your application, but here are the high-level steps:

  1. A customer needs an item shipped between two locations.
  2. A credit check is performed upon hiring to ensure their load qualifies for the requested services.
  3. When the item is delivered, you invoice Denim.
  4. Denim purchases your invoice and you and your carrier are paid within 24 hours.
  5. Denim collects payment from the customer.

Factoring vs Bank Loans

When you get a bank loan, you might put up collateral in the form of AR or other business assets. This allows you to retain ownership of assets while simultaneously selling the invoices to a factoring company. Factored accounts are removed from receivables in exchange for the ability to bill the client directly. 

The transaction simply replaces AR with cash in the bank, or off-balance sheet financing. One big benefit of using a factoring company as a freight broker is that you won't incur a monthly interest expense, unlike a bank loan. 

Factoring allows you to reduce your total balance sheet debt while also lowering your debt-to-equity ratio.

The Benefits of Factoring for Freight Brokers

There are many benefits of factoring for freight brokers. Here are just a few:

More Access to Working Capital

Mega brokers don't suffer cash crunches, they simply keep moving, often steamrolling smaller brokers in the process. Carve out a chance to compete with these big brokers with factoring. What is the total cost of operational pauses? You can't take on new work, your current clients suffer, and in the long run, your reputation suffers. Not to mention you're not at your best as a company when you're constantly stressed over your AR.

Stay Competitive

To build a reputation and maintain it as a freight broker, you need to stay competitive. The more value and better experience you can provide, the more likely you'll be to get referrals. You will live or die by these in the freight industry.


With factoring for freight brokers, your carriers get paid quickly without being charged a fee. The easier you make life for your carriers, the more of them that will come back. Get up to 95% of your invoices paid out just a day after submitting them. 

Increase Value

Why should carriers work with your freight brokerage over the others? Starting out, you need to develop a unique value proposition, even if it's only offering a shred more than your competition. The truth is that the freight brokerage industry, and logistics in general, is extremely competitive. Everyone knows how to offer the fundamentals, including factoring. The question is—will you do so in a way that stands out?

Less Paperwork

Paper shuffling around getting invoices paid is not only a waste of time, but it can also be costly labor. Eliminate labor that you can give to an outside team and recoup much more than the factoring fee in many cases.

Free Credit Checks For Shippers

If you can find a factoring provider like Denim who does free deep dives into shippers, you’ll prevent a lot of unqualified customers from slowing you down.

Enjoy Flexible Financing Options

No two freight brokerages are the same and therefore, they have different financing and payment processes. Because of this, it’s important to have flexible financing options. At Denim, for example, you can choose which invoices you want to factor. In addition, we also have a feature coming soon where you can choose when you get paid to either save on factoring fees or get paid sooner if you need the capital. 

Factoring for Freight Brokers vs Factoring for Carriers

Denim specializes in freight broker factoring because most factoring companies focus on carriers. Why work with a factoring company that doesn't completely understand your unique needs as a freight broker?

You don't just produce or ship; you connect the two parts of the supply chain. Without you, loads are delayed and customers are unsatisfied, leading to damaged reputations over time. We understand the value you provide, which is why we cater just to factoring for freight brokers. Our factoring solutions are made by brokers, for brokers.

How to Choose a Freight Broker Factoring Company

As a freight broker who wants to be paid quickly, who do you go with to provide your factoring? Here are some things to consider when choosing a factoring partner (spoiler alert: a lot more goes into this partnership than just trying to get the lowest rate):


The logistics sector is a tight-knit community so if you’re not sure which factoring company to choose, you can consult others who have been in a similar position to see who they chose.

Success Stories

When choosing a factoring partner for your freight brokerage, it’s great to see success stories from similar brokers. We have many amazing success stories from freight brokers just like you. They share their stories and how factoring helped them grow their business.


Like success stories and referrals, reviews are a great form of social proof as you research different factoring companies. We are proud of our 4.8 star average on TrustPilot


As we mentioned, freight brokers have unique needs and should look for a factoring partner that understands their line of work. You will have different needs than carriers looking for factoring.

Factoring Types

Recourse and non-recourse factoring are the two most common types of factoring. Non-recourse factoring means the factoring company assumes most of the risk of non-payment by your customers. This can be misleading because non-recourse does not necessarily protect your company from all risk. There are usually strict stipulations associated with non-recourse factoring, and the situations in which you are not responsible for customer non-payment are extremely specific.

Advance Rates

When considering your factoring partner, you should decide how much of an advance you would like while you wait for your invoices to be paid in full. Denim offers 90% advances to our clients.


Some factoring companies for freight brokers will require monthly minimums, which can be hard to reach for smaller brokers. At Denim, we don’t require any factoring minimums and you can choose which invoices you want to factor.

Fee Type

Flat and variable fees are common. Variable rates fluctuate with your demand. For example, if you assign volume flex variable rates, you'll pay less the more you sell. Rates can also be tied to prime rates, meaning you'll pay more when your factoring company pays more.

Your Freight Broker Factoring Solution

At Denim, we are passionate about providing freight brokers with the most flexible, easy-to-use, and convenient factoring solutions. Not only do we offer competitive factoring solutions, but our dashboard is cutting-edge and includes business metrics that every freight broker should know about their brokerage. 

Want to learn more about factoring with Denim? Sign up for an account today or schedule a demo to experience the whole platform!

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