Beyond the rate percentage—understand all the costs and compare factoring companies accurately.
A factoring company says "2% rate" and another says "4% rate." Easy choice, right? Not so fast. The advertised rate is only part of the story. Here's how to calculate what factoring REALLY costs and how to compare apples-to-apples.
This is the percentage they advertise. Typically 2-5% of invoice value. But pay attention to how it's structured:
Same rate regardless of when customer pays. Example: 3% on every invoice.
Rate increases if customer takes longer to pay. Example: 2% if paid in 30 days, 3% if 60 days, 4% if 90+ days.
Lower rates for higher monthly volume. Example: 4% for $50K/month, 3% for $150K/month, 2% for $300K+/month.
Many companies charge $5-15 PER INVOICE. On small loads, this fee can double your effective rate.
$500 invoice at advertised 3% rate:
Some companies charge $25-100/week just for having an active account. That's $1,300-$5,200 per year before you factor a single invoice.
Warning: Companies that advertise ultra-low rates (1-2%) often make it back with high weekly fees and transaction costs. Calculate the total.
Getting YOUR money shouldn't cost extra, but some companies charge:
If you factor 50 invoices per month at $3/ACH, that's $150/month or $1,800/year in transfer fees alone.
Good factoring services include benefits that offset costs:
$0.50/gallon savings × 750 gallons/week = $375/week ($19,500/year). This alone exceeds most factoring costs.
IFTA filing, invoicing, collections services worth $200-500/month if purchased separately.
Broker verification prevents bad debt. One avoided $5,000 non-payment pays for months of factoring.
No more chasing payments. Your time has value—10 hours/week × $50/hour = $26,000/year.
Get answers to ALL of these before signing:
Let's compare two factoring companies for an owner-operator running $150,000/month:
| Cost Item | Company A (2% rate) | Company B (3.5% rate) |
|---|---|---|
| Base Factoring Fee | $3,000 | $5,250 |
| Transaction Fees (40 invoices) | $400 | $0 |
| Weekly Account Fee | $400 | $0 |
| ACH Transfer Fees | $120 | $0 |
| Fuel Card Savings | $0 | -$1,500 |
| Monthly Net Cost | $3,920 | $3,750 |
Surprise! The "2% company" actually costs MORE when you account for all fees. Plus Company B includes fuel savings. Always calculate total cost, not just the rate.
The lowest advertised rate is rarely the best deal. Calculate total monthly cost based on YOUR actual volume and usage patterns. Factor in the value of included services. And never sign until you understand ALL the fees. A transparent factoring company will answer every question on this checklist without hesitation.
We believe in simple, honest pricing. No transaction fees, no weekly fees, no transfer fees. Just straightforward factoring rates with fuel discounts and back-office support included. Get a real quote with no surprises.