Non recourse factoring: who eats the loss when a broker doesn't pay
How much do you invoice a month?
We refer carriers to a factoring partner and may be paid for referrals. Disclosure
Recourse or non-recourse, by situation
As a company driver, a broker that went under was the carrier's problem. On your own authority, it's yours, unless you pay someone else to take that risk. Non-recourse is that payment. Whether it's worth it depends on how much risk you're really carrying.
Hauling for many new brokers
Non-recourse often fits
You can't check every broker deeply, and one failure could wipe out a month's profit.
A few large, well-known brokers
Recourse often fits
Their credit is strong, failures are rare, and the price gap is money in your pocket every load.
One broker is most of your freight
Think hard either way
If that broker fails, recourse hits hard, and non-recourse may cap how much it covers from one broker.
Thin cash cushion
Lean non-recourse
A single buyback deducted from your advances could park your truck. Insurance against that has value.
Break-even mathExample
You factor $20,000 a month. Non-recourse costs one point more than recourse: $200 a month, $2,400 a year. A broker failure on a typical $3,000 load costs you $2,700 under recourse. So non-recourse pays for itself if you'd expect about one covered broker failure a year. If you check brokers carefully and haul for established ones, you're likely paying for protection you won't use. If you take whatever the board offers, it's cheap.
One unpaid invoice, day by day
Pick the factoring type and the reason the broker didn't pay. The timeline shows where your money goes. The difference between the two plans shows up only in one case: a broker that truly can't pay.
That's the fine print in one picture. A dispute, a damage claim or a short pay comes back to you under both plans. Non-recourse protects against a broker failing, not against a broker refusing.
Either way, a failed broker's $75,000 bond is the last place to look. File a claim with the bond's surety as soon as you know the broker won't pay, with your rate con, BOL and invoice. Everyone the broker owes is filing too, so you may get only part of it, and only if you're early.
Notice too what happens to your truck in the meantime: nothing. Under either plan you keep hauling and getting advances on other loads. A buyback hurts when it arrives, usually as a smaller deposit for a week or two.
Day 0
Delivered and factored
You upload the paperwork. The factor advances $2,700 (90%) and holds $300 in reserve.
Day 30
Payment due
The broker misses its terms. Its phone goes to voicemail.
Day 31-60
Factor collects
The factor's collections team calls, emails and sends demand letters. You keep hauling; nothing comes out of your pay yet.
Day ~60
Broker fails
The broker files for bankruptcy or shuts down. It isn't going to pay anyone.
Day ~90
Factor takes the loss
Non-recourse covers a broker's credit failure. You keep the $2,700 advance. You usually lose the $300 reserve, and the fee was already earned.
Days and amounts are EXAMPLES; your agreement sets the recourse period, what counts as covered, and what happens to the reserve.
The cheapest coverage is not hauling for a bad broker
Your factor's lookup
Check every new broker in the factor's app before you book. A "no" from the people who collect for a living is the strongest signal you'll get.
FMCSA records
Look the broker up on FMCSA's public registration records: active broker authority, and a bond or trust fund on file. A pending bond cancellation is a stop sign.
Days to pay
Credit services sold with load boards show how fast a broker usually pays. A broker that's slowing down is often a broker in trouble.
What they say
Pressure to book fast, unusual quick-pay offers, a brand-new MC with no history, or a rate far above the market. Any one alone may be fine; two together, check again.
Source: 49 CFR 387.307(a) · checked Oct 2026
When we dispatch your truck, every broker gets this check before its load reaches you, including your factor's approval. A load from a broker that fails it never reaches your phone, however good the rate looks. That's risk you don't have to buy coverage for.
Recourse vs non-recourse factoring, side by side
| Recourse | Non-recourse | |
|---|---|---|
| Typical fee (AtoB, 2026) | 1-3% | 3-5% or more |
| Broker goes bankrupt | You repay the advance | Factor absorbs it, for approved brokers |
| Broker disputes or files a claim | You repay the advance | You repay the advance |
| Short pay or missing paperwork | Your problem | Your problem |
| Which brokers you can factor | Usually wider | Often limited to brokers the factor approves |
| How a buyback is collected | Deducted from future advances | Same, for anything not covered |
Source: AtoB, Freight Factoring guide (updated May 8, 2026) · checked Oct 2026
Ask these before you pay for non-recourse
- Exactly which events are covered: bankruptcy only, or any failure to pay for credit reasons?
- How many days until an unpaid invoice is treated as a credit loss?
- Is there a limit per broker, and what happens to invoices above it?
- Do I keep the reserve on a covered invoice, or lose it?
- Can I switch between recourse and non-recourse, or mix them by broker?
- Is the coverage in the signed agreement, not just the sales sheet?
To see what each fee level costs you per load, with minimums and transfer fees added, use factoring rates. For the whole picture of getting paid faster, start at the fast pay overview.
Non-recourse questions
Our partner, RTS Financial, says on its own site that it offers non-recourse factoring covering cases such as a customer's insolvency or bankruptcy, and its guides are frank that non-recourse comes with stipulations. That's the right attitude to bring to any factor: ask for the exact clause, then decide whether the coverage is worth the price for the brokers you haul for.
Ask for both quotes, recourse and non-recourse
We refer carriers to a factoring partner and may be paid for referrals. Disclosure
We refer carriers to RTS Financial and may be paid for referrals. Not legal or financial advice: read the recourse clause in your agreement. Disclosure
Fewer bad brokers, less to insure against.
Our dispatchers check every broker before offering you a load. The fee is 5% of gross once your MC passes 6 months, 7% before.
Which is better for new carriers?
It depends on who you haul for. A new carrier booking with many unfamiliar brokers gets real value from non-recourse, if the coverage is real and the price gap is small. A new carrier who checks every broker with the factor first and sticks to approved ones can often save the extra fee with recourse and accept a small, managed risk.
How do I read the recourse clause?
Find four things. The recourse period: how many days until an unpaid invoice comes back to you. What counts as covered: usually only a broker's insolvency or bankruptcy. What's excluded: disputes, claims, short pays and paperwork errors. And how a buyback is collected: often deducted from your future advances. If any of those is vague, ask for it in writing.
What is non-recourse factoring?
Factoring where the factor, not you, takes the loss if an approved broker can't pay for credit reasons, such as bankruptcy. It costs more than recourse, about 3-5% or more versus 1-3% in AtoB's 2026 guide. It doesn't cover a broker refusing to pay because of a dispute or a cargo claim.
Who pays if the broker goes out of business?
Under non-recourse, for an approved broker, the factor absorbs the advance. Under recourse, you repay it. Either way, you or the factor can file a claim against the broker's $75,000 bond, which every broker must keep. That bond is shared among everyone the broker owes, so it rarely covers every claim in full.