How we calculate this
- % fee = invoice × fee % (tiered: base % + extra % × each started period after the base days)
- Total fees = % fee + per-invoice fees + transfer fee
- Real cost = total fees ÷ invoice
- Advance = invoice × advance %; reserve = invoice − advance
- Paid when funded = advance − dollar fees − % fee (if taken at funding)
- Paid from reserve = reserve − % fee still owed (tiered extras always come from here)
- Fees per month = total fees × invoices per month + monthly fees
Paid when funded + paid from reserve always equals the invoice minus fees. The reserve is never counted as a cost. Agreements can differ from this model, for example in how they round periods or which fees come out when.
Worked examples
Example numbers only, not typical or average rates. Use the terms in your own offer.
| 3% flat, 90% advance, fee from reserve | $1,800.00 when funded, $140.00 from the reserve. Cost $60.00 (3.0%). |
|---|---|
| 2.5% flat + $15 transfer fee | Cost $65.00 (3.3%): a lower advertised % that costs more than 3%. |
| 2% for 30 days + 0.5% per 15 days, paid on day 46 | Fee grows to 3.0%: $1,760.00 when funded, $180.00 from the reserve. |
FAQ
How do I calculate the real cost of factoring?
Add the percentage fee to every dollar fee on the invoice (processing, ACH or wire), then divide by the invoice amount. That's your real rate per invoice. Add monthly fees over a month's invoices to see the monthly cost.
Is the reserve part of the cost?
No. The reserve is your money held back until the broker pays. This calculator shows it separately and only counts fees as cost. Fees or short payments can be taken from the reserve before it's paid to you.
What is tiered or aging factoring pricing?
The fee starts at a base percentage for a set number of days, then goes up by an extra percentage for each further period the broker takes to pay. A slow-paying broker costs you more. Choose "Grows with time" to model it.
Can I compare factoring with broker quick pay?
Yes. Enter quick pay as another offer: the quick pay fee as the flat %, no reserve (leave the advance blank) and the fee taken when funded. Then check whether your factoring agreement lets you use quick pay at all.
What does the annualized figure mean?
It scales the real cost to a full year based on how many days the broker takes to pay, so you can compare it with a loan or line of credit. A factoring fee is a charge for buying your invoice, not interest.
Is my information saved or shared?
Your inputs are saved only in your own browser so they're there next time. Nothing you type is sent to Trucking Help Center, and there's no signup.
Related tools and guides
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- Cancel or switch your factoring company
- Factoring vs quick pay
- What to do when a broker doesn't pay
- Check a broker's FMCSA authority, free
- Cost per mile calculator
- Factoring companies in the THC directory
Last reviewed . General information, not legal, tax or financial advice. Factoring agreements differ, and each state adopts the UCC with its own changes. Check your own agreement, and talk to a qualified attorney or accountant about your situation. Factoring companies can appear in the Trucking Help Center directory, including through paid partner listings. A listing is not an endorsement, and these guides and tools don't rank or favor any provider.