In a recourse factoring agreement, your trucking company is responsible for a situation where the shipper or broker doesn’t pay on time or at all. Since in this agreement you are sharing the risk, a recourse factoring fee is slightly lower.
The freight factoring company will provide credit checks on the shippers or brokers that you use to minimize the risk of working with debtors who fail to pay. With a recourse factoring agreement there is a portion of your funding held in a reserve account until your client pays the factoring company.
A recourse agreement is best for established trucking companies who have worked with their clients and know their pay terms. Also, it’s good for trucking businesses that don’t need back office assistance. However, billing can be included in the contract if needed.