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Chargebacks Present Hidden Risk to Trucking Companies Using Factoring Services

Chargebacks represent a significant cost concern for trucking carriers relying on freight factoring to manage working capital. When brokers fail to pay invoices within agreed timeframes, factoring companies often issue chargebacks requiring carriers to repay advances, sometimes with additional processing fees. Chargebacks appear frequently in recourse factoring agreements where carriers bear non-payment risk. However, they also occur under many non-recourse agreements that claim to protect against broker bankruptcy but exclude documentation issues and payment delays. A single unpaid $3,000 load illustrates the impact: a carrier receiving a 96 percent advance of $2,880 faces a $120 reserve hold plus a 3 percent factoring fee deducted upon broker payment. Multiple chargebacks annually can trigger unexpected pay reductions, lower advance rates, and higher fees, eroding profitability. Carriers should carefully review factoring agreement terms to understand what coverage they actually receive.