Freight factors are finding their float tested just as small carriers need them most. At FreightWaves’ F3 festival in Chattanooga this week (Oct. 21–22), Phoenix Capital President Bryan Alsobrooks said more shippers have been unilaterally lengthening payment terms from the industry’s typical net-30 out to 45, 75, 90 — even 120 days. That forces factors to carry receivables longer and price for that risk, eroding already thin margins for brokers and carriers, he warned.
Why it matters now: a “working‑capital tug of war” is emerging across supply chains. Fresh examples outside trucking show the pressure isn’t isolated. In the UK, the government’s push to cap most business‑to‑business terms at 60 days (with fines for serial late payers) drew industry blowback this week, underscoring how contentious liquidity practices have become. For haulers reliant on timely settlements to cover fuel, payroll and insurance, the same dynamics translate into tighter factor approvals, higher fees and tougher credit screens on new counterparties.
On the ground, the timing gap is widening even in everyday goods flows: a report published Thursday (Oct. 23) flagged supermarket suppliers facing 60‑, 90‑ and 120‑day waits, a reminder that extended terms are increasingly normalized in big‑buyer relationships. Truckers serving those supply chains feel the lag through their factors, whose DSO stretches with each additional day a shipper sits on an invoice.
The twist: lower fuel costs aren’t offsetting the cash crunch. U.S. on‑highway diesel averaged $3.62 per gallon for the week ended Oct. 20 — the lowest since mid‑June — providing welcome relief on operating expenses. But longer pay cycles can wipe out savings at the balance‑sheet level if factors raise rates or advance percentages to compensate for delayed reimbursements. Put simply, cheaper diesel helps the P&L; slower pay hurts the cash flow.
There are countermeasures emerging. One strand is speeding up the administrative plumbing around freight. Schneider and EXL said Wednesday (Oct. 22) that AI‑enabled automation cut appointment‑scheduling cycle times by more than half and reduced costs by nearly a quarter — small wins that, at scale, shrink back‑office frictions and help invoices move through the system with fewer touches. Faster, cleaner documentation and exceptions handling can mean fewer disputed bills, fewer holds — and a shorter path to payment for factors and their clients.
What to watch next for trucking:
– Pricing power at factors. If shipper DPO keeps stretching, expect more tiered pricing, tighter broker limits and narrower “approved” lists — all of which can slow load coverage for small fleets. Alsobrooks’ comments hint at that recalibration already underway.
– Policy pressure on late payments. The UK debate signals momentum for stricter payment‑time standards. Multinationals operating on both sides of the Atlantic may harmonize terms across markets, influencing U.S. practices even without new rules stateside.
– Tech’s role in cash conversion. As more shippers and brokers digitize scheduling, POD capture and audit, disputes should fall and invoice aging should improve — easing the burden on factors and, ultimately, reducing carriers’ need to pay up for faster cash.
Bottom line: Extending payables is a rational response for shippers guarding liquidity in a soft market. But the cost is being pushed onto the weakest link — small carriers — via the factoring channel. Unless commercial discipline (or regulation) reins in “stretch pay,” expect factoring terms to harden, credit appetites to narrow, and carriers to keep feeling the squeeze — even if diesel at the pump looks friendlier than it did a month ago.
Sources: FreightWaves, IndexBox, Overdrive, U.S. Energy Information Administration, GlobeNewswire, The Times (UK), International Supermarket News
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