Slower Shipper Payments Squeeze Factoring Firms - And Carriers

Just Dispatched

A growing number of shippers are delaying freight payments well beyond the industry standard, creating cash flow challenges for freight factoring companies and the carriers that rely on them. Factoring firms are now reporting payment cycles stretching to 60, 90, and even 120 days, up from the traditional net-30 terms. The shift is hitting factors’ liquidity and raising the cost of capital across the freight payment ecosystem.

“They’re trying to play the cash flow game,” said Bryan Alsobrooks, president of Phoenix Capital Group, during a panel at FreightWaves’ F3 conference earlier this month. “We have to price higher if we’re going to take longer to be paid back, so it really erodes that carrier or broker margin that’s already squeezed.”

Liquidity and Financial Strain

The delays are being driven by a weak freight market, where supply continues to outpace demand. With too many trucks chasing too few loads, shippers hold more negotiating power and are pushing out payables to conserve cash. Carriers, especially small fleets and owner-operators, are often forced to accept these extended terms or risk losing freight.

For factoring companies, the impact is twofold: not only is their capital tied up longer, but their credit risk increases. Some delayed payments may signal deteriorating financial health among shippers and brokers—raising the likelihood of defaults. If a customer doesn’t pay, the factoring firm is often left on the hook, particularly under non-recourse agreements. In one high-profile case, digital broker Surge Transportation’s bankruptcy in 2023 left an estimated $12 million in unpaid invoices across roughly 5,000 carriers. Factoring firms exposed to such clients faced potential losses and claw-backs.

Costs Flow Downstream to Shippers

The ripple effect is reaching the carriers themselves. As factoring companies adjust to the slower pay environment, many are raising fees, tightening advance rates, or increasing reserve holdbacks—directly reducing the cash carriers receive per load. In a margin-thin industry, those shifts could push some small fleets into the red.