Freight factoring turns an invoice into cash today for a fee, usually 1–5% of the invoice. It sounds small, but on a 30-day wait a 3% fee works out at roughly 38% a year.
Worked example: a $2,500 invoice, 12 loads a month
| Option | Fee per load | Cash in hand | A year at 12 loads |
|---|---|---|---|
| Wait 30 days for the broker | $0 | $2,500 (in 30 days) | $0, but ~$30,000 of your own cash tied up |
| Broker quick pay at 2% | $50 | $2,450 | $7,200 |
| Recourse factoring 2.5% + $15 ACH | $77.50 | $2,422.50 | $11,160 |
| Non-recourse 3.5% + $15 ACH | $102.50 | $2,397.50 | $14,760 |
Recourse vs non-recourse
- Recourse is cheaper, but if the broker doesn't pay within the agreed window (often 30–90 days), you buy the invoice back.
- Non-recourse costs more and usually only covers a broker going out of business, not disputes over the load. In the example, it costs $25 more a load: only worth it if you expect more than 1 in 100 loads to go unpaid that way.
Fees to check before you sign
- Is the rate charged once per invoice, or again every 30 days the broker takes?
- ACH, wire and same-day funding fees, monthly minimums, set-up and cancellation fees.
- How and when the reserve is paid back.
Compare your own offers with the free factoring cost calculator.
FAQs
How much does freight factoring cost?
Usually 1–5% of each invoice, commonly 2–3.5% for established carriers, plus per-transfer fees.
Is quick pay cheaper than factoring?
Often, when the broker offers it: 1–2% with no transfer fees can beat factoring for that load.
What does non-recourse factoring cover?
Usually only a broker becoming insolvent; most agreements don't cover disputes over the load.
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