Plain-language guide
Freight Factoring Rates and Fees
A quoted percentage is only one part of the cost. The useful number is the total amount your carrier pays across a realistic month, divided by the invoices funded.
Reviewed July 25, 2026 · Educational information, not legal or financial advice
Key takeaways
- Compare total dollars, not a headline rate.
- Model the broker's actual days-to-pay.
- Add transfer, same-day funding, minimum-volume, and other recurring fees.
- Ask the factor to price the same sample month in writing.
Start with a dollar example
If a factor charges 2% on a $2,000 invoice, the base factoring cost is $40. If there is also a $10 funding fee, the total cost is $50, or 2.5% of the invoice. This is a hypothetical example, not a market-rate claim.
Repeat the math across a full month. Small fixed fees can materially change the effective rate when invoices are small or submitted one at a time.
Understand flat and tiered pricing
A flat rate stays the same for the period described in the contract. A tiered rate can increase as an invoice remains unpaid. Neither structure is automatically better: it depends on your customers' payment speed and the written fee schedule.
For a tiered quote, model invoices at 15, 30, 45, and 60 days. For a flat quote, verify when the flat period ends and what happens after it.
Build the complete fee list
Request one written schedule that includes every charge. If a representative says a fee is usually waived, ask for the waiver in the agreement.
- ACH, wire, fuel-card, or instant-funding fees
- Invoice-processing or credit-check fees
- Monthly minimum, minimum-volume, or shortfall fees
- Unused-line, due-diligence, setup, or maintenance fees
- Reserve requirements and when reserves are released
- Late-invoice, aging, chargeback, or collection-related fees
Use one comparison worksheet
Give each company the same sample: invoice count, average invoice size, monthly volume, expected days-to-pay, funding method, and desired contract type. Ask for the total first-month and annual cost under that scenario.
Keep the quote with the proposed contract and confirm that the contract's definitions match the sales explanation.
Common questions
What is a good factoring rate?
There is no single rate that is good for every carrier. Invoice volume, customer credit, payment speed, recourse, funding method, and contract terms all affect the price. Compare total cost under the same operating scenario.
Is factoring interest?
Factoring is generally structured as the purchase of receivables rather than a loan. The practical comparison is still the total dollar cost and the rights and obligations in the agreement.
Can the lowest rate cost more?
Yes. Fixed transaction fees, minimums, longer commitments, tier increases, or a costly funding method can make a lower headline rate more expensive.
Sources and further reading
Provider sources explain their own products and may present them favorably. AICA links them for definitions and verification, not as endorsements.