*Note: This article is intended to be a helpful guide for carriers seeking more information about average factoring rates across the industry, including insights into how much do freight factoring companies charge. England Carrier Services (ECS) provides one of the best factoring rates in the industry. Its rates may or may not align with the article’s findings.
If you’ve ever come across freight factoring before, it might have seemed too good to be true: Get paid within 24 hours of delivery and boost cash flow in exchange for a small fee. The golden question? How much do freight factoring companies charge?
In this guide, we will explore typical factoring rates across the industry to help you make a more informed decision.
What “factoring cost” really means
When you ask how much do freight factoring companies charge, you’re probably interested in these two numbers:
- The factoring fee (how much do I have to pay)
- The advance rate (how much do I get paid)
Here are the straightforward answers.
Typical factoring fees, industrywide, typically resemble something like this:
- When truckers first begin factoring, they usually pay about 1-5% of the invoice value
- Once a carrier is established with consistent volume, they can expect to pay 2–3%
Advance rates are distinct from factoring fees and often look like this:
- Most factoring companies provide ~90% of the invoice value within 24-hours. They will then pay the remaining amount once the customer has paid
These numbers are macroscopic averages. For owner-operators and small fleets, these numbers can look different.
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Typical rates you’ll see as a trucker
Once truckers start factoring, factoring pricing is unique.
- When owner-operators or small fleets start factoring, they can typically expect 3–5% per invoice or per 30-day period. This number is higher due to lower monthly volume and a higher perceived risk
- For growing fleets with steady volume, the fee will reflect lower risk, at 1.5–3%.
- If a trucking company is particularly high risk, or if they’ve elected for non-recourse factoring (where the factoring company assumes the risk of non-payment), rates will be higher at 4-5%
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What does this look like in practice?
To help you visualize what factoring would look like in your budget, let’s run a hypothetical scenario.
- Let’s say you completed a load for a $1,000 invoice
- Let’s assume that you have a factoring rate of 3% with a 90% advance
In this situation, you would receive $900 upfront, the factoring company would keep $30 as the fee, and you would receive the remaining $70 (the reserve) when the broker pays.
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What actually affects your rate
Now that you understand the general expectations for factoring fees, the question “how much do freight factoring companies charge,” is most honestly answered as “it depends on your trucking company.”
Let’s take a closer look at the factors that will influence your rate:
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Monthly volume
- Higher, consistent volume typically yields a lower factoring rate
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Who you haul for
- If your client list is full of reputable brokers, you’ll also earn a lower factoring rate
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Days‑to‑pay and terms
- If your payment periods are shorter, you might also qualify for a lower factoring rate
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Recourse vs non‑recourse
- In recourse factoring, if the broker doesn’t pay, you eat the loss, but you’ll be granted lower factoring fees for assuming the risk. In non-recourse, the factoring company will cover the loss, but you’ll pay a higher factoring fee
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The bottom line
If you’re wondering how much freight factoring companies charge, a reasonable framework is something like this:
- Expect a factoring fee of 3–4% at the beginning if you’re an owner-operator or small fleet
- You may be granted 2–3% as your volume grows and you build a clientele of reputable brokers
Factoring can be an instrumental tool in promoting healthy cash flow for truckers. When considering how much factoring companies pay, just remember: it depends, but ultimately, factoring fees are predictable.
If you’re ready to begin freight factoring with a company that offers fuel discounts, tire discounts, and renowned customer service, get started here.
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The England Carrier Services (ECS) division offers a range of services for carriers, from maintenance to support. As ECS members, carriers have access to nationwide discounts on fuel and tires from dedicated team members committed to finding the best price. ECS also provides factoring services with benefits such as same-day funding to a bank account or fuel card. These options allow carriers to focus on growing their businesses while saving time and money.