Guide · Settlements

What is escrow in trucking?

By Jordan Sanders, leased owner-operator · About

Short answer: Escrow is money your carrier holds back from your settlements under your lease, usually a set amount each week until it reaches a target balance. It's still your money. Federal leasing rules require the lease to spell out how escrow can be used, require the carrier to account for it and pay interest on it, and require it to be returned within 45 days after the lease ends. In your books, escrow is an asset, not an expense.

Why carriers hold escrow

A carrier pays some of your costs before you do: fuel advances, insurance, plates, damage claims, unreturned equipment. Escrow is a cushion against what you might owe it when the lease ends. Your lease sets the amount and what it can be applied to, so the lease is the first place to look for your numbers.

What the federal leasing rules require

If a lease requires escrow, the federal truth-in-leasing rule (49 CFR 376.12(k)) says the lease has to specify:

• The amount of the escrow fund or performance bond.
• The specific items the escrow can be applied to.
• An accounting of every escrow transaction while the carrier holds it, either shown on each settlement sheet or in a separate monthly accounting, plus your right to ask for an accounting at any time.
• Interest paid on the escrow at least quarterly, at a rate at least equal to the 13-week Treasury bill yield (the carrier may reduce the balance it pays interest on by your average advance).
• The conditions for getting it back. At return, the carrier may deduct only obligations already specified in the lease, must give you a final accounting, and must return the fund no later than 45 days after the lease ends.

That's what the rule says a lease must contain. Whether a particular deduction was allowed under your lease is a question for your lease and, if it comes to a dispute, a lawyer.

How escrow shows up on a settlement sheet

Most carriers show escrow as a deduction line ("Escrow" or "Maintenance escrow") and print the running escrow balance somewhere on the sheet. Interest credited to escrow may show as an addition. Keep the escrow balance from every sheet; it's the number you'll check your books against. (Here's how to read the rest of the sheet.)

How to record escrow in your books

1. Set up an asset account, such as "Escrow held by carrier" (an other current asset). Not an expense account.
2. Each settlement: the escrow line goes to that asset account, so the asset grows by the amount held back.
3. Interest credited: record it as interest income and add it to the escrow balance.
4. Charges the carrier takes out of escrow (a repair, a damage claim): move them from the asset to the right expense account, with the carrier's accounting attached.
5. When it's returned: the deposit reduces the asset. Whatever was deducted at return goes to its expense account.
6. Every month: the escrow asset in your books should equal the balance printed on your latest settlement sheet. If it doesn't, find the week that's off.

Booked this way, escrow never makes your profit look smaller than it is, and the money the carrier is holding shows up on your balance sheet as yours.

What goes wrong when escrow is booked as an expense

• Your profit looks lower than it really is, month after month.
• Your balance sheet hides money that belongs to you, which matters when a lender looks at what you own.
• When the escrow comes back, it looks like mystery income.

How escrow is treated on your tax return is a question for your tax preparer; the books just need to show what happened.

Sources: 49 CFR 376.12(k), Escrow funds (Federal Motor Carrier Safety Administration leasing regulations, eCFR current through October 28, 2026). Checked October 30, 2026.