Factoring quotes are famously slippery: one company advertises '1.5%', another '3%', and somehow the 3% deal ends up cheaper. That's because a factoring rate only means something alongside three other numbers - the advance rate, the fee period, and the fine print on reserves and extra fees.
Here's how to read a factoring quote like someone who's been burned before (without the burn).
The anatomy of a factoring deal
- Advance rate: what you get up front when you submit the invoice - typically 85-95% for freight, 80-90% elsewhere. The rest is held in reserve.
- Factoring fee: the cost, quoted either flat (e.g., 2.5% of the invoice, period) or tiered (e.g., 1.5% per 30 days the invoice is outstanding).
- Reserve release: when you get the held-back remainder, minus fees - usually when your customer pays.
- Recourse: with recourse (cheaper), unpaid invoices come back to you. Non-recourse (pricier) shifts defined credit risk to the factor.
What real numbers look like
Example: a $10,000 freight invoice at a 3% flat fee with a 95% advance. You receive $9,500 tomorrow, and when the broker pays in 40 days you receive the remaining $500 minus the $300 fee. Total cost: $300 to compress 40 days of waiting into one.
| Industry / volume | Typical fee | Advance rate |
|---|---|---|
| Trucking, $50K+/mo volume | 1.5% - 3% flat | 90-95% |
| Trucking, small/new carrier | 3% - 5% flat | 85-90% |
| B2B services / parts suppliers | 1% - 2% per 30 days | 80-90% |
| Spot factoring (single invoices) | 3% - 6% | 80-90% |
The fees that hide in the fine print
ACH fees per transaction, monthly minimum volume penalties, invoice upload fees, and termination fees on long contracts. A '1.9%' quote with $10 ACH fees and a $500 monthly minimum can cost more than a clean 3% flat. Always compare total monthly cost, not the headline rate.
60-Second Funding Check
No credit pull. No obligation. Just a straight answer.
What do you need funding for?
How to pay less for factoring
- Factor selectively if allowed - your slowest payers only, not your whole book
- Volume is leverage: as monthly factored volume grows, re-negotiate the tier
- Clean paperwork = fewer disputes = better rates over time
- Compare recourse vs. non-recourse honestly: if your customers are solid brokers and fleets, paying extra for non-recourse may be insurance you don't need
We know which factors treat carriers right
Factoring relationships go wrong in the service details - reserve games, slow releases, surprise minimums. Dealerun's factoring partners are vetted on exactly those points, and we'll match you to one that fits your volume and customer mix. No cost to compare.
Find your factoring match
Tell us your monthly volume and who you haul or bill for - get matched to a factor with honest terms.
FAQ
Is invoice factoring a loan?+
No - you're selling a receivable at a discount, not borrowing. That's why approval hinges on your customers' payment reliability more than your credit, and why factoring doesn't add debt to your balance sheet.
What's the difference between recourse and non-recourse factoring?+
Recourse: if your customer doesn't pay, you buy the invoice back - lower fees. Non-recourse: the factor absorbs defined non-payment risk (usually customer insolvency) - higher fees. Read what 'non-recourse' actually covers; it's narrower than most assume.
Can a brand-new trucking company factor invoices?+
Yes - factoring is often the FIRST financing a new carrier can get, because approval rides on your brokers' credit, not yours. New authorities factor from their first load all the time.
Get a callback from a funding specialist
Real questions, straight answers - no scripts, no pressure.
No credit impact. We never sell your information.
Ready to put this to work?
See what funding your business qualifies for - it takes two minutes and won't affect your credit.