How each one works
| Factoring | Quick pay | |
|---|---|---|
| Who pays you | The factoring company | The broker |
| Which loads | Usually all of them | Just that broker's loads, when you ask |
| Fee | A percent of each invoice | A percent of that load |
| Contract | Yes, often with a term and a notice period | No, it's a choice per load |
| Broker credit checks | Many factors check brokers for you | You check them yourself |
| If the broker doesn't pay | Depends on recourse or non-recourse | Not an issue once you're paid |
When factoring makes sense
- You're a new authority and cash is tight while you build up
- You haul for a lot of brokers and don't want to chase each one
- You want a second set of eyes on broker credit before you book
- Your brokers don't offer quick pay, or charge more for it than a factor would
When quick pay makes sense
- You have some cash cushion and only need fast money now and then
- Most of your freight comes from a few brokers who offer quick pay
- You don't want a contract, a lien on your invoices, or a minimum volume
Read the factoring contract for these
- Recourse or non-recourse, and exactly what counts as a non-recourse event
- All the fees: the main rate plus wire, ACH, invoice, minimum and early termination fees
- Term and notice: how long you're locked in and how much notice you have to give
- Minimum volume you have to factor each month
- Whether you have to factor every load, or can pick
- The UCC lien: factors usually file one on your invoices, and you need it released before you switch
- Reserves: money held back until the broker pays, and when you get it
Count the fee in your rate
Whatever you pay to get paid fast comes off the top of every load. If you factor or take quick pay most of the time, put that percent into the cost per mile calculator next to your dispatch fee. It raises the rate per loaded mile you need to break even.
How TenFour fits in
We don't sell factoring, and we never touch your freight money. Brokers pay you directly, or your factoring company if you use one. We send the rate con, BOL and POD to you or your factor the day you deliver, so nothing holds up payment. If you factor, we make sure brokers have your notice of assignment with the setup packet.
Questions
What's the difference between factoring and quick pay?
Factoring is a company that buys your invoices from all your brokers and pays you fast, then collects from the brokers. Quick pay is one broker paying you early on its own loads, for a fee. Factoring covers every load. Quick pay is load by load, broker by broker.
What is non-recourse factoring?
It means the factoring company takes the loss if a broker can't pay because it went broke. It usually doesn't cover disputes: a shortage, a damage claim, a missing POD or a rate fight still comes back to you. Read the contract's definition, not the ad.
What is a notice of assignment?
A letter telling a broker to pay your factoring company instead of you. Once a broker has it, payments for those loads should go to the factor. Make sure every broker you haul for has it, or payments end up in the wrong place.
Can I use quick pay if I factor?
Usually not on the same loads, since the factor owns the invoice. Some carriers factor only some brokers, but many factoring contracts require you to send all your invoices. Check yours.
Want a dispatcher who works for your margin?
Every truck gets its own dispatcher. We judge every load on rate per total mile, deadhead included, and never book under your minimum. Brokers pay you directly.