Factoring is a financing arrangement where a trucking company sells its unpaid invoices — typically owed by brokers or shippers — to a third-party factoring company at a discount, in exchange for getting paid immediately rather than waiting the standard 30, 45, or 60+ days a broker might otherwise take to pay. The factoring company then collects the full invoice amount directly from the broker or shipper when it comes due, keeping the discount as its fee. This is especially common among small carriers and owner-operators, for whom cash flow — covering fuel, payroll, and truck payments — matters more than maximizing the total amount eventually collected on every invoice. Factoring comes in two main forms: recourse factoring, which is cheaper but requires the carrier to buy back the invoice if the broker never pays, and non-recourse factoring, which is more expensive but the factoring company absorbs the loss if the broker defaults. Because factoring companies are essentially betting on a broker's ability and willingness to pay, a carrier's average days-to-pay and payment history are directly relevant to how favorable a factoring rate they can get — which is also why a broker's own payment track record matters so much to the carriers who work with them.
A small carrier that just paid for a major repair might factor an invoice to get cash today instead of waiting 45 days for the broker to pay.
This is the concept behind the Factoring Score card shown in the sidebar of every carrier profile, and one of the categories in the site's factoring/insurance matching tool.