Glossary · Factoring
Chargeback
Also called: Charge-back
Definition
A chargeback is an amount a factor deducts from a carrier's reserve or future advances to recover an invoice that went unpaid, short-paid or disputed.
Chargebacks are how factors collect on recourse. Typical triggers: the debtor short-pays for a lumper fee or damage claim, refuses detention that wasn't approved, disputes the load, pays the carrier directly, or simply doesn't pay inside the recourse window. The deduction usually comes first from the reserve, then from the next funding.
A chargeback recovers money only while the client keeps factoring with you. Track the chargeback rate per client and per debtor. A rising rate on one client is often the first visible sign of trouble with its operation, its paperwork or its honesty.
Explain chargeback terms in plain language at onboarding. Surprise chargebacks are a common reason carriers leave, and a client in a dispute is harder to collect from.