Quick pay & factoring

Question:

In the trucking industry, truck drivers deliver loads for companies or companies via brokers. For example, when the load is delivered, and the driver wants to obtain his money for the service, he has to wait a month or longer to acquire it from the broker, or he can get the money immediately. However, the broker will charge a fee for early payments. In other words, if the driver wants his money early, the broker will pay from their own money along with charging a fee, then obtain the full amount from the company they are working with after waiting for the required time. Another way to receive the money immediately would be by giving your invoice to a factoring company. Thereupon, the factoring company pays the driver quickly from their pocket; however, they also charge a fee. The factoring company charges the broker or company the full amount that was due to the driver and waits for the required duration to acquire it. Would this fee be considered interest?

Answer: ﺑﺴﻢ اﷲ اﻟﺮﺣﻤﻦ اﻟﺮﺣﯿﻢ In the name of Allah, the Most Gracious, the Most Merciful

If the trucking company decides to obtain the money immediately (i.e. quick pay) from the broker in exchange for a fee instead of waiting a more extended period, this would be impermissible because it constitutes interest. Raddul Muhtar: v. 5, p. 640 (Darul Fikr); Fathul Qadeer: v. 8, p. 426 (Darul Fikr); Ahsanul Fatawa: v. 7, p. 180 (HM Saeed Company) If the trucking company decides to acquire the money via factoring company, this would also be impermissible on account of selling debt being prohibited in Islam due to it being an interest-based transaction. Allah ﺗﻌﺎﻟﻰ says, “And Allah has made permissible trade and forbidden usury.” (2:275) Al-Mabsoot li Al-Sarakhsi: v. 12, p. 70 (Darul M’arifah); Raddul Muhtar: v. 4, p. 517 (Darul Fikr); Bada'i Al-Sana'i: v. 5, p. 148 (DKI); Jadeed Fiqhi Masaail: v. 1, p. 283 (Zamzam); Fiqhul Buyoo: v. 1, p. 347 (Maktaba

M’aariful Quran); Fatawa Haqqania: v. 6, p. 91 (Jami’ah Darul Uloom Haqqania Akora Khattak)

Only Allah knows best

Written by Maulana Mohammad Ahsan Osmani Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham