Quick answer: Instead of waiting 30–90 days for your customer to pay, you submit the invoice to a freight factoring company . This can usually be done electronically through a portal, email, or app.
Step 1: Deliver the Load
Your trucking company completes a shipment for a broker or shipper. You issue an invoice along with supporting documents like a bill of lading or proof of delivery.
Step 2: Submit the Invoice to the Factor
👉 Mehmi offers invoice & freight factoring solutions designed specifically for transportation businesses.
BDC’s factoring guide distinguishes selling receivables from borrowing money.
“Factoring is not a loan”
That distinction matters when comparing factoring with a credit line: review invoice eligibility, collection responsibilities, fees and who bears non-payment risk.
Step 3: Advance Payment
The factoring company advances 70%–95% of the invoice value to your account subject to lender review.
- Example: Invoice = $20,000 → Advance Rate 90% → $18,000 cash upfront.
Step 4: Collections by the Factor
The factoring company then collects payment directly from your customer on the original invoice due date (e.g., 30, 60, or 90 days).
- With recourse factoring, you’re responsible if your customer doesn’t pay.
- With non-recourse factoring, the factoring company assumes the risk of non-payment.
Step 5: Remaining Balance Settlement
When your customer pays the full invoice, the factoring company deducts their fee (1%–5%) and releases the remaining balance to you.
- From the $20,000 example above: $18,000 advance + $1,600 balance after fees = $19,600 net proceeds.
Timeline Summary
| Step | Action | Timing |
|---|---|---|
| 1 | Deliver load & issue invoice | Day 0 |
| 2 | Submit invoice to factor | Day 0–1 |
| 3 | Receive advance (70%–95%) | Day 1–2 |
| 4 | Factor collects from shipper | Day 30–90 (depending on terms) |
| 5 | Balance released after fee | Upon customer payment |
Why This Process Works Well for Trucking
- Covers fuel, maintenance, and payroll immediately
- Turns receivables into working capital quickly
- Improves ability to bid on bigger contracts
- Reduces time spent chasing payments
FAQ: Freight Factoring Process
1. How fast can I get cash after invoicing?
Approval and funding timelines vary by lender, application completeness, and required conditions.
2. How much of my invoice will I receive upfront?
Most factors advance 70%–95%, with trucking often qualifying for higher advances.
3. Do I lose money in the process?
You pay a fee (1%–5%), but gain immediate liquidity to keep operations running.
4. What documents are needed?
Typically invoices, bills of lading, and proof of delivery.
5. Is factoring considered debt?
No. It’s an advance on your receivables, not a loan.
6. Can startups use freight factoring?
Yes—factoring is based on your customers’ credit, not your own.
Final Thoughts
The process of freight factoring is straightforward: deliver, invoice, submit, get cash, and let the factor handle collections. For trucking companies, it bridges the gap between delayed customer payments and immediate operating expenses.
At Mehmi Financial Group, we provide transparent and fast freight factoring solutions that help carriers across Canada manage cash flow and grow their fleets.
Run your numbers with our calculator or contact us for a personalized quote.
Are you looking for a truck? Browse our used inventory today.
Authoritative references
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program:
The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
Program eligibility, lender criteria, tax treatment, and product terms can change. Verify current official guidance and final financing documents before making a decision.