Understanding Recourse and Non-Recourse Factoring in Trucking

For trucking companies, cash flow is one of the most critical aspects of business success. Between fuel costs, vehicle maintenance, payroll, insurance, and other expenses, waiting weeks or months for freight invoices to be paid can create financial strain. Many trucking businesses face the challenge of covering immediate costs while waiting on slow-paying customers.

Invoice factoring is a popular financial solution that helps trucking companies get paid faster by selling their unpaid invoices to a factoring company. Instead of waiting 30, 60, or 90 days for customer payments, businesses receive immediate cash to cover operational expenses. Riviera Finance, a leader in invoice factoring with over 50 years of experience, provides tailored factoring solutions for trucking companies, helping them maintain cash flow and financial stability.

What Is Freight Factoring?

Freight factoring, also known as trucking factoring, is a financing method that allows trucking businesses to sell their unpaid freight invoices to a factoring company for immediate cash. This eliminates the long wait for customer payments and ensures trucking companies have the working capital needed to keep their operations running smoothly.

How Freight Factoring Works

1. Deliver the Load

A trucking company completes a shipment and submits an invoice to the customer (shipper or broker).

2. Sell the Invoice

The trucking company sells the invoice to a factoring company like Riviera Finance.

3. Receive Immediate Cash

Riviera Finance advances up to 95% of the invoice value within 24 hours.

4. Customer Pays the Factoring Company

Once the customer pays the invoice, the factoring company releases the remaining balance, minus a small factoring fee.

Freight factoring provides a steady cash flow solution, allowing trucking businesses to cover operating expenses without waiting for delayed payments.

Related: How Factoring Companies Help Trucking Businesses Stay Afloat

Recourse vs. Non-Recourse Factoring: What’s the Difference?

When choosing a factoring program, trucking companies must decide between recourse and non-recourse factoring. Each option has its advantages, depending on the business’s financial goals and risk tolerance.

Recourse Factoring

Recourse factoring is a type of factoring agreement where the trucking company retains responsibility for unpaid invoices if the customer fails to pay for any reason. This means that if the customer defaults, the trucking business must buy back the unpaid invoice or replace it with another invoice of equal value.

Key Features of Recourse Factoring:

• Lower factoring fees compared to non-recourse factoring
• Higher advance rates
• Best suited for businesses with strong credit management and reliable customers
• Greater responsibility for invoice collection, increasing potential risk

Non-Recourse Factoring

Non-recourse factoring shifts the credit risk of non-payment from the trucking company to the factoring provider. If a customer fails to pay due to bankruptcy or financial insolvency, the factoring company absorbs the loss.

Key Features of Non-Recourse Factoring:

• Provides protection against customer non-payment, reducing financial risk
• Slightly higher factoring fees due to the increased risk taken on by the factoring company
• Best suited for businesses that want added security and peace of mind

Allows trucking companies to focus on operations rather than collections.

Which Factoring Option is Best for Your Trucking Business?

When deciding between recourse and non-recourse factoring, trucking companies should consider several factors:

Risk Tolerance

If you’re comfortable taking on the risk of unpaid invoices, recourse factoring may be a better option due to its lower fees. If you prefer added security, non-recourse factoring eliminates the risk of customer defaults for credit reasons.

Cost Considerations

Non-recourse factoring comes with slightly higher fees due to the added protection it provides. Consider whether the additional cost is worth the financial security.

Customer Creditworthiness

Evaluating customer credit risk is not an easy task, even large, seemingly secure companies have had to file for bankruptcy (recent examples include Convoy, Yellow Corp, and more). However, if your customers have a strong history of on-time payments and you  feel confident in your customer’s credit, recourse factoring can be a cost-effective choice. If your customers’ payment reliability is uncertain, non-recourse factoring provides extra protection.

Business Growth Goals

If you’re looking to scale your business quickly, non-recourse factoring allows you to take on new customers without worrying about credit risk.

Benefits of Choosing Riviera Finance for Trucking Factoring

Riviera Finance has been a trusted name in freight factoring for over 50 years, providing tailored solutions for trucking businesses. Here’s why trucking companies choose Riviera Finance:

• Trusted Industry Leader – Decades of experience helping trucking businesses manage cash flow.
• Flexible Factoring Solutions – Riviera works with start-ups to large fleets and has no monthly minimums.  You are in control of your business and have the freedom to choose when and what you want to factor..
• Fast Funding – Get paid in as little as 24 hours, ensuring uninterrupted operations.
• Credit Protection – Non-recourse factoring ensures trucking companies aren’t left covering unpaid invoices.
• Dedicated Support – Personalized account managers provide expert guidance and customer support.

Steps to Get Started with Riviera Finance

Getting started with Riviera Finance is simple and hassle-free. Here’s how trucking companies can begin with transportation factoring:

1. Submit an Application – Complete a short application with basic business details.
2. Invoice Verification – Riviera Finance verifies invoices and assesses customer creditworthiness.
3. Receive Funding – Approved businesses receive up to 95% of the invoice value within 24 hours.
4. Ongoing Support – Riviera Finance manages collections and provides ongoing assistance.

No long-term contracts or hidden fees make Riviera Finance a reliable choice for trucking businesses seeking quick and efficient funding.

Next Steps for Freight Factoring

Understanding the difference between recourse and non-recourse factoring is essential for trucking businesses looking to manage cash flow effectively. While recourse factoring offers lower fees and higher advances, non-recourse factoring provides added security against customer credit defaults. Choosing the right option depends on your business’s financial goals, risk tolerance, and customer reliability.

Riviera Finance’s flexible factoring solutions, fast funding, and dedicated support make it the ideal partner for trucking businesses. Whether you need immediate cash flow or credit protection, Riviera Finance has a solution tailored to your needs.

If you’re ready to streamline your cash flow and reduce financial stress, contact Riviera Finance online today for a free consultation or visit their website to learn more.