Every factoring pitch leads with the same number, and it's the wrong one. "Two percent." Two percent of what, released when, with which fees stacked underneath, and what happens the week a broker disputes a load — that's the actual price. It's never the number on the flyer.
None of which makes factoring a scam. Plenty of trucks are running today because somebody factored an invoice at exactly the right moment. But you ought to know what you're buying.
What you actually pay
Headline rates generally land between 1% and 5% of the invoice, depending on three things: recourse or non-recourse, how much volume you push through, and the credit quality of the brokers you haul for. A one-truck operation running mixed spot freight is not getting the rate in the ad.
Put real numbers on it. A $2,500 load at 3% is $75 off the top. That sounds survivable until you convert it into cents per mile. On a load paying $2.50 a mile, a 3% fee is 7.5 cents of every mile you run, gone before you've bought a gallon of fuel.
The fees under the fee
The percentage is the part they advertise. Read the agreement for the rest:
- Transfer fees. A few dollars per ACH, more for a wire, charged per invoice. On a lot of small invoices that adds up faster than the percentage does.
- Monthly minimums. A slow month where you didn't factor enough can still cost you the minimum. That's a fee for not using the service.
- Reserve holdback. Some agreements advance most of the invoice and hold a reserve until the broker pays. Not a fee exactly — but it's your money, and you don't have it yet.
- Term and termination. The one that catches people. A long contract with a notice window and an early-exit penalty means the rate you signed at is the rate you have, even after you've grown into a better one.
The word "non-recourse" does less work than you think
Non-recourse costs more, and the pitch is that you're covered if the broker doesn't pay. Read what it actually covers, because on most agreements it's credit risk only — the broker goes under, files bankruptcy, closes the doors. That's it.
What it usually does not cover is a dispute. Receiver claims the freight came in damaged, the load ran late, the paperwork's wrong, somebody's arguing over a lumper — that invoice comes back to you, non-recourse or not. The protection is against a broker who can't pay, not one who won't. Those are different problems, and the second one is the one you'll actually meet.
When it's worth every penny anyway
Here's the other side of it, honestly. Brokers commonly pay on 30 to 45 day terms. Fuel is due now. The payment is due now. That gap has ended more small carriers than bad rates ever have, and factoring exists to close it.
Three situations where I wouldn't argue much about paying the fee:
- You can't float the gap. A load you turned down because you couldn't cover fuel until the invoice cleared cost you the whole rate, not 3% of it.
- The alternative is worse money. Against a merchant cash advance or a credit card at revolving rates, a 3% factoring fee is cheap capital. Against nothing at all, it's the difference between running and parking.
- You want the credit check. Underrated: a factor refusing to buy an invoice is telling you something about that broker for free. They pull credit on companies you can't easily research. When they say no, listen.
Worth pricing against broker quick-pay too, which often runs a similar 2–3%. Quick-pay is per load; factoring is a standing arrangement — that flexibility is worth something in a good month.
Put the fee in your cost per mile
The mistake isn't factoring. It's factoring while you quote rates as though you don't. If 3% comes off every invoice, your true floor is higher than your spreadsheet says by exactly that much, and a load you priced at breakeven is a load you're paying to haul. Build the fee into your number and every rate conversation after it is an honest one. The cost calculator will hold it for you, and Areva keeps it in the math on every load she checks, so the floor you're quoting is the floor you actually have.