Learning Center
How freight factoring works, step by step
Six steps run between a signed BOL and money in your account. Knowing where each one can stall is what keeps a funding day from turning into a funding week.
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Written and reviewed by the HaulFund editorial team · Published · Last reviewed
Educational information for transportation businesses. Not legal, tax or financial advice.
Short answer
Freight factoring works by selling a delivered load's invoice to a factoring provider. You submit the rate confirmation, signed BOL and invoice; the provider verifies the load with the customer, advances a percentage of the invoice, holds the rest as reserve, collects from the broker or shipper, then releases the reserve less fees.
Key takeaways
- Nothing funds until the paperwork is complete and legible — that is the most common delay.
- Verification depends on the broker responding, not only on your provider.
- The advance is partial by design; the reserve settles after collection.
- Collections move to the provider once a Notice of Assignment is issued.
- Terms, timing and fees differ by provider and are subject to their approval.
The six steps
Step 1
Deliver the load
You run the freight and get a signed BOL or POD at the receiver.
Step 2
Submit the paperwork
Rate confirmation, signed BOL and the invoice go to the provider, usually by app, portal or email.
Step 3
Verification
The provider confirms with the broker or shipper that the load delivered clean and the invoice is approved for payment.
Step 4
Advance funded
A percentage of the invoice is sent by ACH or wire. The remainder is held as reserve.
Step 5
Collections
The provider's AR team follows the invoice and chases the customer through their terms.
Step 6
Reserve released
When the customer pays, the held reserve is released to you, less fees the provider deducts at that point.
What slows funding down
- Unsigned or unreadable bills of lading.
- Invoice amounts that do not match the rate confirmation.
- A broker whose AR desk does not answer verification calls.
- A new debtor that has not been credit-approved yet.
- Submitting after the provider's daily funding cutoff.
Frequently asked questions
- What paperwork does a factoring provider need for a load?
- Typically the signed rate confirmation, the signed bill of lading or proof of delivery, and the invoice. Some providers also require lumper receipts or accessorial documentation.
- How fast is funding after submission?
- Speed depends on the provider, the time of day you submit, whether verification with the broker completes, and whether you take ACH or wire. Timelines vary by provider and are not guaranteed.
- Who collects payment from the broker?
- The factoring provider's accounts receivable team, because the invoice has been assigned to them via a Notice of Assignment.
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HaulFund is a factoring broker and is not a direct lender or factoring provider. HaulFund connects businesses with independent third-party factoring providers. HaulFund does not make final credit, underwriting, approval, or funding decisions. Rates, fees, advance amounts, funding times, contract terms, and eligibility vary by provider and are subject to provider approval.