How to Switch Factoring Companies: 8 Steps, in Order

By The Haul Factor Team · Updated Nov 1, 2026 · Reviewed against sources Nov 1, 2026 · Some factors pay us a referral fee when a driver signs with them. You pay nothing extra, and it never changes a score or ranking. How we make money

The cheapest time to switch is the end of the term, with notice sent on time. The fastest is a buyout, and it costs more. One rule heads off most trouble: one invoice, one factor.

A TruckersReport poster wrote:

“I promise you that you will NOT find a factoring company that will tell you or explain in simple English how much it will cost you to switch company’s or quit factoring.” (source, TruckersReport, Jan 2022)

This page is the plain-English version. It covers the move itself: getting from the old factor to the new one without a month of no cash, and without a broker paying the wrong company. If you only want out and won’t factor again, start with how to get out of a factoring contract.

Can you switch factoring companies?

Yes. Your contract decides when, and what it costs. Two ways to do it:

• Cutover at the end of the term. You give notice on time. The old factor keeps the invoices it already bought until brokers pay them. The new factor takes every load from the cutover date. Often no exit fee at the end of the term. Read yours to be sure.
• Buyout before the end of the term. The new factor pays off what the old one is owed on your open invoices, and you move in one step. It’s faster. You can still owe the old factor’s exit fee, and you pay a second fee on the bought-out loads.

Some factors won’t buy out early. A driver on r/Truckers wrote:

“Ours is giving us a hard time, saying we aren’t eligible for a buyout until our contract expires.” (source, r/Truckers, Nov 2021)

Step 1: What is your exit date and exit fee?

Two numbers set your timing. Your last day to give notice is the term end date minus the notice days. Miss it and many contracts renew. The exit fee in dollars matters too, because the formula can turn a few hundred dollars into a few thousand. The exit guide walks through finding your notice date and putting the fee in dollars. The clause finder points to both if you paste in your contract.

Then work backward. An r/OwnerOperators commenter put it this way:

“If you’re going to switch, start about a month before that window comes up.” (source, r/OwnerOperators, Aug 2026)

Read “window” as your notice deadline, not the end date.

If your factor was bought or renamed, first find out which company holds your agreement. We sourced what changed for TAFS and Instapay agreements and for Fleet One agreements.

Step 2: What should the new factor put in writing before you give notice?

Once your notice is in, you’re on a clock. If the new offer changes, or the new factor turns down half your brokers, you can end up between two factors with neither funding you. Ask by email for:

• The rate, and what changes it: days to pay, volume, anything else.
• Every fee on top: per invoice, ACH, wire, fuel advance, monthly minimum.
• The advance, and how many days until the reserve comes back.
• Recourse or non-recourse, and what happens when a broker doesn’t pay. See what non-recourse covers.
• Contract length, auto-renewal, notice days and the exit fee in dollars. This is the next contract you’ll have to get out of.
• If you want a buyout: what it charges on the invoices it buys.

An r/OwnerOperators reply boiled it down:

“Compare reserves, recourse and exit fees, not just the factoring rate.” (source, r/OwnerOperators, Oct 2026)

For what a rate means in dollars, see freight factoring rates. To read what verified drivers say about a factor’s reserves and leaving, open its profile. Profiles with fewer than 10 verified reviews say “Not scored yet.”

Step 3: Which brokers does the new factor have to approve?

A factor buys invoices only from brokers it approves. Send the new factor a list of every broker you haul for, starting with the ones with open invoices and the ones you book most. Get the answer in writing.

For any broker it won’t take, decide now: use that broker’s quick pay, bill it yourself once the old factor releases it, or stop hauling for it. Don’t find out at the cutover.

This matters even more in a buyout. One r/OwnerOperators poster in July 2025 said a buyout stalled over two invoices on a broker the new factor hadn’t approved.

Step 4: Cutover date or buyout?

In a buyout, the old factor sends a payoff letter: every open invoice, what it advanced on each, the fees it’s owed, any exit fee, and the date the figure is good through. The new factor wires that amount. Then the old factor releases your brokers and ends its lien.

Example, not any one factor’s terms: on $30,000 of open invoices, the old factor’s 3% is $900 and the new factor’s 2.5% is another $750. That $750 is part of the price of leaving early. Add it to the exit fee when you compare leaving now with waiting.

Read how your contract treats a buyout, too. A TruckersReport poster wrote that the terms in his agreement were meant to make leaving hard:

“the terms in the agreement were intended to make it difficult and expensive to cancel in the event of a disagreement, or to immediately go to another factoring company (buyout).” (source, TruckersReport, Oct 2014)

If yours has a separate buyout clause, put that number in dollars too.

Step 5: How do you give notice to the old factor?

Send it the way the contract says (certified mail, a named email address, whatever it names), before the deadline, and keep proof. The notice letter template has the wording. For a switch, add three requests in the same letter and ask for the answers in writing:

1. Release letters to every broker you’ve factored, effective on your end date.
2. A payoff letter, if you’re doing a buyout, good through a set date.
3. A promise to forward any payment it receives for a load delivered after the end date, within a set number of days.

Expect a counteroffer. If it’s real, get it in writing and run the numbers again. If it isn’t, stick to the plan. The payoff and release template covers the requests.

Step 6: Which goes first, the release letters or the new notice of assignment?

When you started factoring, your factor sent each broker a notice of assignment (NOA). It tells the broker to pay the factor, not you. The broker keeps following it until the factor sends a release letter. If the new factor’s NOA lands while the old one is still in place, the broker holds two letters telling it to pay two companies. Some brokers just hold the payment until it’s sorted out. That’s how a switch turns into weeks without a check.

So for each broker, the old factor’s release goes first, then the new factor’s NOA. The broker notices template helps with the message to the broker.

Step 7: Why one invoice, one factor?

During the switch you’ll have two factors for a few weeks, each with its own loads, split by one cutover date both agree to in writing. Never sell one invoice to two factors. That’s double-factoring, and it breaks both contracts.

Watch the cash gap. Between the last load the old factor funds and the first the new one funds, you can have days with no advance. Plan fuel and payroll for that.

Step 8: What happens to the UCC-3, the reserve and the new lien?

The old factor’s UCC-1 lien should be ended with a UCC-3 termination once nothing is owed. Your new factor files its own. Under UCC section 9-513, the secured party generally has 20 days after your written demand, and state rules vary. The UCC-3 request template explains the ask. Check your state’s UCC records to see that it was filed.

Your reserve comes back after the last open invoice is paid. Ask for the full balance and a final statement showing every advance, payment and fee.

What if the old factor won’t let go?

1. Get the no in writing, with the contract section.
2. Ask about a buyout, or a negotiated release.
3. Offer a set leave date and ask for a reduced fee.
4. If money is being held, or fees charged that the contract doesn’t allow, call a business lawyer. Bring the contract, your notice and every reply.

Questions to ask before you sign with the new factor

Ask the new factor the six written-answer questions in the exit guide’s checklist: term and renewal, notice, the cost of leaving in dollars, minimums, reserve timing, and release letter and UCC-3 timing. See the factoring contract clauses to read before you sign. Two more matter only when you switch:

• Will you approve every broker I haul for before I give notice?
• If I move early, will you buy out my open invoices, and what do you charge for it?

Your next step

• Choosing the next factor? Look up factors and read what verified drivers say about reserves, leaving and fees. The ranked list orders factors by published terms and driver scores only.
• Leaving? Use the Exit Kit. It’s free.
• Already switched? Tell the next driver how it went. Every reviewer’s MC or USDOT number is checked.

Some factors pay us a referral fee when a driver signs with them. You pay nothing extra, and it never changes a score or ranking. We don’t pick a factor for you.

Where these numbers come from

• Driver quotes: public posts on TruckersReport and Reddit, linked above. Excerpts, unedited except for straight apostrophes. We don’t name posters. The two name-change guides linked in Step 1 name the factors they cover.
• Dollar figures and dates: labeled Example. They’re math, not any one factor’s terms.
• UCC timing: UCC section 9-513. The notice deadline is the term end date minus the notice days. Brokers usually pay open invoices in about 30 days. Your contracts and your state’s law can change any of it.
• General information, not legal advice. If real money is at stake or a factor is holding funds, have a business lawyer read the contracts.

Common questions

Can I switch factoring companies before my contract ends?

Yes, if you pay the exit fee or the new factor buys out your open invoices. Check how your contract treats a buyout, put every fee in dollars, and compare that with what staying costs until the end of the term.

How long does it take to switch factoring companies?

Start from your notice deadline, not the end date, and give yourself about a month before it to line up the new factor. With a cutover, the old factor’s open invoices take about one broker payment cycle to clear, often around 30 days. The UCC-3 and reserve come after that. A buyout can move you sooner.

What is a factoring buyout?

The new factor pays your old factor what it’s owed on your open invoices: what it advanced plus its fees, and sometimes the exit fee. The new factor then owns those invoices and collects from the brokers. You move in one step, but you pay a second fee on the bought-out loads.

Do I need a release letter to switch factors?

Yes, for every broker your old factor sent a notice of assignment to. Brokers keep paying the old factor until they get a release. Get the release to the broker first, then the new factor’s notice.

What happens to my open invoices when I switch?

In a cutover, the old factor keeps the invoices it bought until brokers pay them, and your reserve comes back after that. In a buyout, the new factor buys them and pays off the old factor.

Can I use two factoring companies at the same time?

Not for the same invoice. Selling one invoice to two factors is double-factoring and breaks both contracts. During a switch you have two factors for a few weeks, each with its own loads, split by one agreed cutover date.

Will my new factor pay my termination fee?

Some cover part of it. Many don’t. If one does, ask in writing whether it comes back out of your reserve or your rate later. Don’t count on it when you work out the cost of leaving in step 1.

What happens to the UCC lien when I switch?

The old factor’s UCC-1 should be ended with a UCC-3 termination once nothing is owed. Your new factor files its own. Under UCC 9-513 the secured party generally has 20 days after your written demand. State rules vary. This isn’t legal advice.

Related: How to get out of a factoring contract · Freight factoring rates · Non-recourse factoring · What is freight factoring? · TAFS Factoring Is Now Part of eCapital · Fleet One Factoring Is Now WEX Capital

Haul Factor isn’t a lender or a law firm. Numbers here are examples, not financial or legal advice. Your contracts decide.

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