When it comes to managing your trucking company’s cash flow, choosing the right freight factoring partner is a big decision. One of the most common questions truckers have is whether to go with recourse or non-recourse factoring. On the surface, non-recourse may seem like a no-brainer: no risk, right? Not so fast.

In this article, we’ll break down the truth behind these two factoring types, expose the fine print behind “non-recourse,” and show you why transparent recourse factoring from TMG may actually be the smarter, safer option.

What Is Freight Factoring?

Freight factoring is a financial service that allows truckers and carriers to get paid faster by selling their invoices to a third party (a factoring company). Instead of waiting 30, 60, or even 90 days for a broker or shipper to pay, you get paid within 24 hours by the factoring company — for a small fee.

Why Truckers Use Factoring

• Immediate cash flow for fuel, repairs, driver pay, etc.

• Less time chasing payments from brokers

• Back-office support (credit checks, collections, invoicing)

How It Works

1. You haul a load and deliver it

2. You submit the invoice and rate confirmation to the factoring company

3. The factoring company verifies it and pays you (typically within 24 hours)

4. They collect payment from the broker later

It sounds simple, but the details matter — especially when it comes to recourse vs. non-recourse.

What Is Recourse Factoring?

Definition and How It Works

With recourse factoring, if the broker or shipper doesn’t pay the invoice, you are responsible for repaying the factoring company. Essentially, you’re guaranteeing the invoice will be paid.

Benefits of Recourse Factoring

• Lower fees: Because you carry the risk, the factoring company charges less

• More flexibility: Recourse programs typically accept more brokers

• Fewer restrictions: Easier to qualify, especially for new authorities

Why It’s the Industry Standard

Most of the freight factoring industry operates on a recourse basis because it offers a good balance of risk and reward. It keeps costs low for truckers and gives factoring companies the ability to serve more clients.

Here’s a great breakdown from Investopedia if you want a textbook definition of recourse factoring.

What Is Non-Recourse Factoring?

What It Claims to Offer

Non-recourse factoring is advertised as a safer option. The claim is that if the broker doesn’t pay, the factoring company eats the loss — not you. In theory, this sounds great.

The Fine Print They Don’t Tell You

Here’s what they don’t tell you until you’re locked into a contract:

• Non-recourse only applies if the broker files bankruptcy

• If the broker delays payment, disputes the invoice, or refuses to pay — you still owe

• It often excludes certain types of loads, brokers, or invoice conditions

In other words, non-recourse protection doesn’t cover the most common payment issues truckers actually face.

Why Non-Recourse Is Mostly Marketing Hype

It Sounds Good — But Isn’t Full Protection

Let’s be honest. Most factoring companies use “non-recourse” as a marketing gimmick to attract truckers who are worried about payment risk. But when you read the fine print, you’ll see that the protection is extremely limited.

A report by NerdWallet highlights this issue, pointing out how important it is to understand what you’re actually getting in a factoring agreement.

You Still Eat the Loss in Most Situations

If a broker disputes the invoice, claims the load was late, damaged, or not delivered properly — you’re still on the hook. Non-recourse doesn’t protect you from human error or business disputes.

In fact, factoring companies often find a way to shift the blame back to the trucker and claw back funds anyway.

You Pay More for Less Flexibility

To make matters worse:

• Non-recourse plans have higher fees (sometimes 1-2% more)

• They restrict the brokers you can haul for

• You often need perfect paperwork and invoice conditions

In short, you’re paying more for an illusion of security that doesn’t exist.

How TMG Keeps It Honest with Transparent Recourse Factoring

At Transportation Management Group, we don’t hide behind vague language or marketing fluff. We offer simple, flat-rate recourse factoring that helps truckers grow their business without surprises.

We Don’t Hide Behind Fine Print

Our contracts are transparent and easy to understand. You’ll know exactly what you’re responsible for, and what we’re handling for you. There are no surprise fees, no tiered rates, and no bait-and-switch terms.

Low Rates, Fast Pay, Real Support

• Rates starting as low as 0.65%

• Same-day funding

• No monthly minimums

• No long-term contracts

• Dedicated account manager

We’re here to partner with you, not profit off confusion.

We Help You Avoid Bad Brokers From the Start

TMG runs credit checks on all brokers before you haul the load. We help you make smart decisions so you’re less likely to get burned.

Want to do some of your own checks too? Use the Federal Motor Carrier Safety Administration’s SAFER System at safer.fmcsa.dot.gov to look up broker safety and reliability.

When Does Non-Recourse Actually Help?

We’ll be fair. In a very narrow set of cases, non-recourse may help:

• If a large broker goes bankrupt with no warning

• If you’re factoring only top-tier brokers with clean contracts

• If you’re okay paying higher rates for that peace of mind

But for 95% of truckers, recourse factoring with the right partner (like TMG) is smarter, cheaper, and more flexible.

Conclusion: The Smarter Move for Your Business

The truth is, there is no magical safety net in trucking finance. Non-recourse factoring is usually recourse in disguise — with a few bankruptcy clauses sprinkled in.

If you want real protection, it comes from:

• Partnering with a transparent, honest factoring company

• Making smart decisions about who you haul for

• Having support that goes beyond just funding

TMG is here to do more than cut you a check. We’re here to help you grow.

Here’s a helpful small business guide from the SBA if you’re working on tightening your financial processes.

Ready to Factor Smarter?

Reach out to our team today and see why truckers across the country are switching to TMG. We’ll walk you through our process and show you exactly how much you can save.

No tricks. No hidden terms. Just honest factoring.