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Non-recourse factoring is a type of freight factoring that’s becoming increasingly popular in the trucking industry. What’s appealing about this form of factoring is that the factoring company pays the advance even if the client is unable to pay because of credit issues. It generally provides protection in the event of “qualifying” credit issues such as bankruptcy. However, it does not offer protection if non-payment is due to dispute over-charges. Here’s a closer look at some of the other pros and cons of non-recourse factoring.


1. Better Cash Flow

A non-recourse factoring program means a steady cash flow even when you have to wait for payments or deal with the hassle of a client who suddenly can’t pay for legitimate reasons. This working capital can serve many purposes, including:

• Paying for operation expenses
• Investing in business growth
• Having regular access to money for living expenses

2. Bad Debt Protection

Normally, if a creditor is unable to pay, a trucking company or owner-operator will have to pay back the advance. But with non-recourse protection, advances do not have to be paid back if payments aren’t received for acceptable reasons. This is especially appealing for smaller operations without significant cash reserves to pay back advances.

3. Fees Are Similar for Recourse and Non-Recourse Factoring Plans

The cost of factoring is typically comparable for both recourse and non-recourse programs. It’s essentially an added form of “insurance” that can fit into most budgets.

4. It’s Often Easier Than Securing Loans

An alternative to factoring for times when cash flow is slow is getting a loan. However, the process of doing so is often tedious, complex, and associated with a number of conditions. Applying for either recourse or non-recourse factoring is usually a much faster and easier option for improving cash flow.

Note: Some factoring plans also include funding solutions that can help with slow periods.


1. Amount of Protection Can Vary

Not all companies that offer non-recourse factoring programs are created equal. The level of protection can vary, which means taking the time to sort through the fine print with terms and conditions. A good way to avoid this hassle is to work with trusted companies like Pay4Freight that have a reputation for offering comprehensive programs and plans.

2. Non-Recourse Companies Tend to Be More selective with Payments

No factoring company, no matter how reputable it happens to be, wants to finance risky invoices or ones from companies with a history of defaulting. However, this is only a negative issue if you know you have some clients with a spotty track record when it comes to making payments.

3. Some Other Types of Financing Are Less Expensive

Yes, there are many potential benefits associated with non-recourse and recourse factoring. Still, there are other financing options that may be more affordable for companies or owner-operators already operating on a very limited budget. However, if you have a fairly healthy profit margin, factoring programs may benefit your business.


The best way to ensure that you’ll have good relationships with your clients is to do your homework when choosing customers and using reliable load boards. Even if you do take such steps, there’s always the possibility of unexpected payment issues. It’s these instances that non-recourse factoring protects you against. While there are some downsides associated with this type of factoring, it can also provide added peace of mind that may also be good for your bottom line.

Get the most from your freight factoring experience by taking advantage of the programs and added services available from Pay4Freight. We’re also a reliable source of up-to-date information about load boards, regulatory compliance, and other topics specific to the trucking industry.

At Pay4Freight, we help truckers and owner-operators be their best with easily accessible and conveniently flexible freight factoring programs. You can also turn to us for the resources you need to make confident decisions.

Check out our website to learn more about what we do and how we do it then contact us with your questions.