The Pros and Cons of Factoring – And Why I’m Considering In-House Factoring

In trucking, cash flow is everything. When you’re waiting 30, 45, sometimes even 60 days to get paid, factoring feels like a lifesaver. I’ve been with my current factoring company for nine years, and I can honestly say there are a lot of benefits:

• You get paid fast, usually within 24 hours.

• They help keep your paperwork neat and organized.

• They run credit checks so you know if a broker is good before you haul the load.

• And they chase down payments, which saves you time.

For a long time, factoring worked really well for me. But as time went on, I started to notice the downsides.

Not too long ago, I had a situation where a broker I worked with stopped paying my factoring company. Normally, I’d get a letter of release, take over collections myself, and move on. But this time, the factoring company refused to release it. That meant I had to call the broker, explain the chargeback, and push for payment—yet I was still charged my factoring fee. Basically, I was doing the work and still paying for it.

That’s when it hit me: this is exactly how I felt back when I used to take fuel advances. They helped me survive in the beginning, but after a while, I realized how much money I was throwing away on fees. Eventually, I stopped taking fuel advances, and it was one of the best business decisions I ever made.

Now I’m looking at factoring the same way. If I switch to doing in-house factoring—using a line of credit to advance my own invoices—I could save around $5,800 a year just in fees. That’s real money I could use for marketing, taxes, or just putting back into the business.

Don’t get me wrong, factoring still has its place. It’s a great tool for new carriers or anyone who needs quick cash flow. But for me, after nine years, it feels like the right time to move toward in-house factoring. It means more responsibility, but also more control—and more money staying in my pocket.

👉 What about you? Have you ever thought about moving away from factoring, or are you sticking with it for the convenience? I’d love to hear how other carriers are handling cash flow in their businesses.