When a Broker Doesn't Pay Your Factoring Company
A broker failing is the single most expensive event in a small carrier's year. What happens next depends on one clause.
What happens first
Your factor stops receiving payment on invoices assigned to that broker. Depending on your agreement, one of two things follows.
- Under recourse: after a chargeback period, the unpaid invoices come back to you. You repay the advance.
- Under non-recourse: the factor absorbs the loss if the event meets the covered-event definition. A formal insolvency usually does. A broker quietly winding down may not.
The surety bond
US freight brokers must carry a BMC-84 surety bond. When a broker fails, carriers and factors claim against it. Bonds are frequently oversubscribed — total claims exceed the bond — so claimants recover a fraction. File early; late claims recover less or nothing.
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Reducing the exposure before it happens
- Check broker credit before accepting every load. Your factor should make this instant. If it takes a day, that is a real weakness.
- Watch concentration. If one broker is a large share of your revenue, that is your single point of failure.
- Watch payment drift. A broker moving from 30 to 45 to 60 days is the earliest warning you will get.
- Keep paperwork clean. Under non-recourse, a missing signature can be the difference between a covered claim and a declined one.
- Know your chargeback window so a recourse chargeback is not a surprise.
The question to ask your factor
"If a broker I haul for files Chapter 11 next month with $18,000 of my invoices outstanding, walk me through exactly what happens and when." A good factor answers precisely. A vague answer is itself the answer.
How to read the blanks on this site
Every populated figure on this site was read from the company's own published pages, with the source and date attached. Where a cell says Not published, the company does not put that term in writing on its site — and in a market where the contract matters more than the headline rate, what a factor declines to publish is often the more useful signal. We never fill a gap with an estimate.