Factoring Company Charged Back an Unpaid Load? What Carriers Can Do

Not legal advice. This is a document-preparation tool, not a law firm. Results aren't guaranteed. Verify all info with FMCSA and consult an attorney for legal questions.

Factoring gets you paid fast, but when a broker doesn't pay, the problem can bounce back to you. Here's how to think about it and what to do. This is general information; your factoring agreement controls.

Check the broker first. It's free.

See authority status, authority age, BMC-84/85 on file, and the surety name from FMCSA records.

Broker owes you? Build a demand letter + bond-claim packet for

9. Recourse vs. non-recourse

Recourse: if the broker doesn't pay within the agreed time, the factor can charge the invoice back to you, deduct it from future advances, or ask you to repay.
Non-recourse: the factor takes on some non-payment risk, but usually only for specific reasons spelled out in the contract (for example, broker insolvency). Disputes, short pays, and missing paperwork are often excluded.

Read the definitions section of your agreement. The details matter more than the label.

Who owns the claim?

When you factor an invoice, the factor typically buys it or takes a security interest in it. That affects who can demand payment, who the broker should pay, and who files a bond claim. Before you do anything, call your factor and ask:

Do you still own this receivable, or has it been charged back to us?
What collection steps have you already taken, and can we have copies?
Will you file the bond claim, or should we? Do you need to sign off?
Where should the broker send payment?

Get the answers in writing. A broker paying the wrong party, or two parties sending conflicting demands, slows everything down.

If the invoice is charged back to you

Once it's yours again, you can pursue the broker directly. Ask the factor for a written reassignment or release, plus any notice of assignment it sent the broker, so the broker knows to pay you now. Then:

Send a final demand letter with your remit-to info. See how to write one.
Look up the broker's BMC-84 surety or BMC-85 trustee with our free Broker Check.
File a bond claim if the deadline passes. See the guide.

If the factor still owns it

Work with the factor. Share your documents, and offer the demand and claim letters if it helps. Many factors have collection teams that already file bond claims.

The broker says it already paid

It happens: the broker paid you directly, or paid the factor, or paid someone impersonating you. Ask for proof of payment (date, amount, method, payee). Brokers must keep transaction records that include the date of payment to the carrier, and each party to the transaction has the right to review that record (49 CFR 371.3).

Short pays and deductions

If the broker paid part of the invoice and deducted the rest, figure out why. See what to do about a short pay.

Protect yourself

Check every broker's authority and bond before booking. The factor's credit check is useful, but it isn't the same as FMCSA's record.
Keep your own copies of all paperwork.
Know your agreement's recourse period and fees.
Watch the brokers you haul for. Pro sends alerts on bond cancellations and revocations. See Pro.

Our $19 claim packet creates the demand letter, bond-claim letter, and exhibit checklist. Note on any letter that the receivable was factored, if that applies. Also see deadlines.

Questions to ask before you sign with a factor

Is this recourse or non-recourse, and exactly which non-payment reasons are covered?
How many days before a chargeback?
What fees apply on a chargeback or a late-paying broker?
Who files bond claims, and do you charge for it?
Will you share broker credit information before I book?
How do I get a release if an invoice comes back to me?

Write the answers down, and compare them with the written agreement. If they don't match, the agreement usually wins.

Common mistakes

Sending your own demand on an invoice the factor still owns. It can confuse the broker and your factor.
Not getting a written release after a chargeback, then having the broker pay the factor anyway.
Assuming non-recourse covers everything. Disputes and short pays usually aren't covered.
Letting the factor's credit check replace your own FMCSA check. Do both.

A simple coordination plan

Call the factor the day the invoice is past terms.
Agree in writing who sends the demand and who files the bond claim.
Share documents in one email thread.
Set a date to check in.
If the invoice comes back to you, get the release and send your own demand the same week.

Sources

FAQ

Can I file a bond claim on a factored invoice?
Possibly, but it depends on who owns the receivable under your factoring agreement. If the factor bought it, the factor may need to file, or you may need its written consent. Read your agreement and ask the factor.

What is recourse factoring?
Under recourse factoring, the factor can charge an unpaid invoice back to you. Under non-recourse, the factor absorbs certain non-payment risks, as defined in your contract. Terms vary widely.

Check the broker first. It's free.

See authority status, authority age, BMC-84/85 on file, and the surety name from FMCSA records.

Broker owes you? Build a demand letter + bond-claim packet for $19.

More guides

Not legal advice. This is a document-preparation tool, not a law firm. Results aren't guaranteed. Verify all info with FMCSA and consult an attorney for legal questions.