Which term describes a method of maintaining cash flow by selling freight invoices to a financial institution at a discounted rate?

Which term describes a method of maintaining cash flow by selling freight invoices to a financial institution at a discounted rate?

• A. Factoring
• B. Recourse factoring
• C. Non-recourse factoring
• D. Rate Confirmation (Rate Con)/Load Tender

Answer: (A)

Factoring is a financing method where you sell your freight invoices to a finance company at a discount to get cash right away. In trucking, this means you don’t wait for customers to pay you under their terms; the factor advances most of the invoice value up front and then collects payment from the customer. The factor also holds some money back as a reserve and takes a fee for the service. This helps maintain steady cash flow between loads so you can cover fuel, payroll, and other expenses without waiting for net terms to run their course. There are variants like recourse factoring and non-recourse factoring that differ in who bears the risk if a customer doesn’t pay, but the general concept described—selling invoices to get immediate cash—is Factoring. Rate Confirmation (Rate Con)/Load Tender is about confirming rates and committing to a load, not financing through invoice sale.

Factoring is a financing method where you sell your freight invoices to a finance company at a discount to get cash right away. In trucking, this means you don’t wait for customers to pay you under their terms; the factor advances most of the invoice value up front and then collects payment from the customer. The factor also holds some money back as a reserve and takes a fee for the service. This helps maintain steady cash flow between loads so you can cover fuel, payroll, and other expenses without waiting for net terms to run their course.

There are variants like recourse factoring and non-recourse factoring that differ in who bears the risk if a customer doesn’t pay, but the general concept described—selling invoices to get immediate cash—is Factoring. Rate Confirmation (Rate Con)/Load Tender is about confirming rates and committing to a load, not financing through invoice sale.