Recourse vs Non-Recourse Factoring for Trucking: What Is Actually Covered
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Short answer
- Recourse: if the broker doesn’t pay, you owe the factor back (buy-back or chargeback).
- Non-recourse: the factor eats the loss, but only for the reasons listed in your contract, usually broker insolvency.
- Disputes, paperwork problems and cargo claims are usually not covered either way.
Side by side
| Recourse | Non-recourse | |
|---|---|---|
| Broker goes bankrupt | You repay the advance | Factor usually absorbs it (check definition) |
| Broker disputes the load (damage, late, short-pay) | You repay | Usually you repay; disputes are commonly excluded |
| Missing or wrong paperwork | You repay | You repay |
| Broker the factor didn’t approve | You repay | Usually not covered |
| Typical price | Often lower | Often higher |
| Buy-back window | Defined in contract (ask: 60, 90 days?) | Defined in contract |
General patterns, not legal advice. Your contract’s definitions decide what is covered.
Who offers what (per their own sites)
- OTR Solutions advertises “true non-recourse” factoring with no chargebacks.
- Apex Capital lists both recourse and non-recourse options.
- Bobtail offers recourse factoring, with broker bond claims and shipper collection, plus no reserve and month-to-month terms.
- Outgo says it keeps your business protected from brokers going out of business. Ask what the contract covers.
Five questions that settle it
- Exactly what events are covered under non-recourse? Get the contract language.
- How many days before a recourse buy-back is triggered?
- Is there a credit limit per broker, and what happens if I haul over it?
- What is the rate difference between your recourse and non-recourse programs for my volume?
- Are there monthly minimums or termination fees?
Next: how freight factoring works and factoring for new authority.
Frequently asked questions
What is the difference between recourse and non-recourse factoring?
With recourse factoring, if the broker doesn’t pay within the agreed window, you have to buy the invoice back or replace it. With non-recourse factoring, the factor absorbs the loss in the situations the contract covers, which is usually the broker’s financial inability to pay, such as bankruptcy or insolvency.
Does non-recourse factoring cover every unpaid invoice?
Usually not. Non-recourse protection typically covers credit risk (the broker can’t pay), not disputes such as cargo claims, missing paperwork, short-pays over detention or lumper fees, or a load the factor didn’t approve. Bobtail, which offers recourse factoring, notes that non-recourse often covers only broker bankruptcy. Read the definition in the contract.
Is non-recourse factoring more expensive?
Often the rate is higher because the factor takes on more risk, but not always. Compare written quotes for the same volume and brokers, and compare the fee schedules, not just the headline rate.
Which is better for a new authority?
Non-recourse can protect a new carrier with thin cash reserves from one bad broker. But if most of your freight goes through brokers with strong credit and you check credit before booking, a lower-cost recourse deal with no long contract can work too. OTR Solutions argues non-recourse is the best option for new authorities; Bobtail offers recourse with no reserve and month-to-month terms.
Sources
- OTR Solutions: What is freight factoring (non-recourse) (checked Oct 31, 2026)
- Bobtail freight factoring guide (recourse, non-recourse note) (checked Oct 31, 2026)
- Apex Capital freight factoring (both options) (checked Oct 31, 2026)
- Outgo (protection from brokers going out of business) (checked Oct 31, 2026)
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