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Factoring Contract Checklist

Go through your factoring agreement one clause at a time. Mark each one clear, unclear or a concern, and get a list of questions to send the factor before you sign. Free, no signup.

0 of 12 checked. Your answers stay in this browser only.

  1. 1. Fee schedule

    Look for: Every fee: the percentage, how it changes with time, and dollar fees per invoice, per transfer, per month and at setup.

    The advertised percentage is often only part of the cost.

  2. 2. Advance and reserve

    Look for: The advance percentage, when the reserve is released, and what can be taken from it.

    The reserve is your money; you need to know when it comes back.

  3. 3. Recourse

    Look for: Whether it's recourse or non-recourse, the recourse period in days, what counts as a covered loss and every exclusion.

    It decides who pays when a broker doesn't.

  4. 4. Every invoice or some

    Look for: Whether you must factor all invoices, all invoices from certain brokers, or can choose.

    It decides whether you can still use quick pay or collect some invoices yourself.

  5. 5. Minimum volume

    Look for: A minimum monthly volume or fee, and what happens if you don't meet it.

    Minimums cost the most in slow months.

  6. 6. Term and automatic renewal

    Look for: How long the agreement lasts, whether it renews automatically, and the notice window to stop renewal.

    Missing a notice window can lock you in for another term.

  7. 7. Termination

    Look for: How to end it, the termination fee, and how open invoices and the reserve are handled afterwards.

    It's what leaving will cost and how long your money stays held.

  8. 8. UCC filing

    Look for: Whether the factor will file a UCC-1, what collateral it covers, and when it will be terminated.

    A broad filing can make it harder to get other financing.

  9. 9. Funding times

    Look for: The daily cutoff, when approved invoices are funded, and how weekends and holidays are handled.

    It sets when you can actually count on the money.

  10. 10. Broker approval

    Look for: How brokers are approved, how credit limits work, and what happens to loads with unapproved brokers.

    An unapproved broker can mean an invoice isn't funded or isn't covered.

  11. 11. Disputes and notices

    Look for: Where notices must be sent, how to raise a dispute, and any arbitration or venue clause.

    It decides how you raise a problem and where it would be resolved.

  12. 12. Personal guarantee

    Look for: Whether you personally guarantee the business's obligations under the agreement.

    A guarantee can make you personally responsible for buy-backs and fees.

Your summary

Ask the factor in writing

Mark a clause “Unclear or missing” to add a question.

Raise before you sign

Nothing marked as a concern.

Clear

Nothing marked clear yet.

Not checked yet: Fee schedule, Advance and reserve, Recourse, Every invoice or some, Minimum volume, Term and automatic renewal, Termination, UCC filing, Funding times, Broker approval, Disputes and notices, Personal guarantee.

This helps you ask the right questions. It isn't a legal review: for a personal guarantee, arbitration clause, or a large or unusual agreement, have an attorney read it.

FAQ

What should I look for in a factoring contract?

The full fee schedule, the advance and reserve terms, recourse and its exclusions, whether you must factor every invoice, minimums, the term and automatic renewal, termination costs, the UCC filing, funding times, broker approval, and any personal guarantee.

What are red flags in a factoring agreement?

Anything you can't get explained in writing: fees not in the schedule, automatic renewal with a short notice window, a large termination fee, a broad UCC filing, or a personal guarantee you didn't expect. Ask about each before you sign.

Is this checklist a legal review?

No. It helps you find the clauses that matter and ask the right questions. For a personal guarantee, an arbitration clause, or a large or unusual agreement, have an attorney licensed in your state read it.

Related tools and guides

Last reviewed . General information, not legal, tax or financial advice. Factoring agreements differ, and each state adopts the UCC with its own changes. Check your own agreement, and talk to a qualified attorney or accountant about your situation. Factoring companies can appear in the Trucking Help Center directory, including through paid partner listings. A listing is not an endorsement, and these guides and tools don't rank or favor any provider.