Freight factoring - how it works for UK hauliers and couriers

• Cash flow challenge: I’m waiting weeks for brokers and shippers to pay, but I have ongoing fuel, maintenance, and driver expenses to cover now.

• Perfect for: UK road freight, courier and logistics firms that invoice shippers, freight forwarders or brokers and want faster access to working capital without taking on additional debt.

Novuna helps freight businesses unlock cash from unpaid invoices through factoring, either through our award winning in-house service or by comparing the market to find the best fit for your needs.

We match you with providers experienced in funding for transport and logistics, help you apply, and make sure you get the right deal.

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How freight factoring works

1. You complete a load and obtain proof of delivery or signed CMR/POD.
   
   

2. You raise the invoice to the shipper or broker and submit it to the factoring provider.
   
   

3. You receive an advance, typically a high percentage of the invoice value, often within 24 to 48 hours.
   
   

4. When your customer pays the invoice, the remaining balance is released to you minus the factoring fee.

Freight factoring is designed around the transport workflow, including POD validation, fuel cost pressures and frequent invoicing cycles.

Recourse, non‑recourse and notification

• Recourse factoring: If the end customer does not pay after an agreed period, you are responsible for repurchasing the debt. Fees are typically lower.
• Non‑recourse factoring: The factor assumes defined non‑payment risk according to the agreement. Fees are higher and cover specific events set out in the contract.
• Disclosed vs confidential: With disclosed arrangements, your customer sees assignment details on the invoice. With confidential structures, you may keep credit control in‑house using a trust or service account. Larger fleets sometimes opt for invoice discounting to keep control of collections.

Typical eligibility and documents

• UK entity trading B2B with shippers, brokers, forwarders or large retailers
• Clean invoicing practices with clear PODs and rate confirmations
• Reasonable customer spread and credit quality
• Standard transport terms and RHA/CMR where applicable
• Documents: customer contracts, PODs, rate agreements, invoice schedules and aged debtor reports

Costs, reserves and how pricing works

Factoring fees usually include a service fee and, where applicable, discount charges calculated daily until your customer pays. Providers may hold a reserve to cover disputes, deductions and accessorials, then release it on collection. Always compare:

• Advance rate and reserve level
• Service and discount fees
• Minimum term, notice and any early exit charges
• Additional services such as fuel cards, same‑day payments or credit checks

Benefits for transport and logistics operators

• Faster cash to cover fuel, wages, tyres, servicing and repairs
• Smoother working capital for accepting more loads and routes
• Optional outsourced collections so your office staff focus on planning and compliance
• Funding that scales with turnover as you grow

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Risks and things to watch

• Margin impact from fees if rates are not priced into your haulage tariffs
• Customer concentration risk if a single shipper dominates the ledger
• Disputes or short pays delaying final balance release
• Contract terms that restrict assignment or set unusual set-off rights

Mitigate these with clear rate confirmations, timely PODs, careful onboarding of new customers and regular ledger reviews.

When to choose factoring vs other funding

• Choose freight factoring if the main constraint is waiting for invoices to be paid and you need cash quickly against completed loads.
• Choose invoice factoring on a broader basis if you supply non‑transport services too
• Choose invoice discounting if you prefer to keep credit control in‑house and have robust processes
• Choose asset finance if the priority is acquiring or upgrading vehicles and trailers
• Choose business loans for one‑off investments not tied to invoices

Operational checklist for a smooth setup

• Standardise POD capture and submission workflows
• Issue invoices promptly with all required references
• Track disputes and accessorial to reduce deductions
• Maintain an up‑to‑date aged debtors report
• Agree a clear communication plan for key customers

Why choose Novuna for invoice discounting?

• Flexible terms tailored to recruitment sector needs
• Fast funding decisions to keep your agency moving
• Dedicated support from cash flow specialists who understand your industry