How the true cost of factoring is calculated
Fee per invoice = invoice × factoring % + flat fees Yearly cost = fee × loads per month × 12 Effective APR = fee ÷ cash advanced × (365 ÷ days broker takes to pay)
A 3% fee to get paid 30 days early works out to about 38% a year. That can still be worth it for a new authority, because it pays your fuel this week and the factor checks broker credit for you.
Recourse vs non-recourse
- Recourse: lower fee, but you pay it back if the broker doesn't pay.
- Non-recourse: higher fee; the factor takes the loss if the broker goes broke (usually only for insolvency).
Common questions
What is a normal factoring rate for trucking?
Most trucking factoring rates fall between about 1.5% and 5% per invoice, depending on volume, recourse terms and broker credit.
Is factoring worth it for new owner-operators?
Often yes for the first months, while brokers pay in 30–60 days and you need cash for fuel. Compare the yearly cost against quick-pay options.
What hidden fees should I look for?
Monthly minimums, ACH or wire fees, termination fees and long contract terms.