A factoring rate is a share of the invoice, not a yearly rate. A 3% fee on a $3,000 load that your broker pays in 35 days, plus a $15 same-day transfer, costs you $105. With a 95% advance you get $2,835 in cash that day, so the $105 works out to an estimated APR of about 38.6%. The calculator below does the same sum with your own offer.
Three words you will see below. The advance is the part of the invoice paid to you when you submit the load. The reserve is the rest, held by the factor until your broker pays. Recourse means you have to buy the invoice back if the broker never pays.
It is built for owner-operators and small fleets weighing up a freight factoring contract, or checking whether the one they have still makes sense. It does not tell you which factoring company to pick. It tells you what an offer costs, in dollars and as an annual rate.
Freight factoring calculator
How the freight factoring calculator works
Every number comes from the offer you type in.
- Factoring fee = invoice amount × factoring rate. With tiered pricing, the rate is the first-period rate plus one step for every block of days, or part of a block, after that period.
- Total cost = factoring fee + fixed fees per invoice.
- Cash at funding = invoice × advance rate, minus the fixed fees, minus the factoring fee if the factor takes it upfront.
- Reserve rebate = invoice minus the advance, minus the factoring fee if the factor takes it from the reserve. If the fee is larger than the reserve, the difference is money you owe back.
- Estimated APR = total cost ÷ cash at funding × 365 ÷ days until payment. This is how the federal truth-in-lending rule (Regulation Z, Appendix J) annualizes a single advance repaid in one payment within a year. Factoring is not a consumer loan, but it is the standard way to turn a fee for a few weeks into a yearly rate you can compare.
- Same cash elsewhere = cash at funding × the APR you choose × days ÷ 365.
Three worked examples
These are the same cases we used to test the calculator, worked out by hand.
| Case | Offer | Cost | Cash at funding | Reserve back | Estimated APR |
|---|---|---|---|---|---|
| A. Flat rate | $3,000 invoice, 95% advance, 3% flat, $15 transfer, paid in 35 days, fee from the reserve | $105 | $2,835 | $60 | 38.6% |
| A2. Fee upfront | Same as A, but the fee comes out of the advance | $105 | $2,745 | $150 | 39.9% |
| B. Tiered | $5,000 invoice, 90% advance, 2% for 30 days + 0.5% per 10 days, paid in 42 days, no fixed fees, fee upfront | $150 (3%) | $4,350 | $500 | 30.0% |
Case A2 shows why the timing of the fee matters. The dollars are the same, $105, but you hold less cash from day one, so the annual rate goes up. In case B the broker pays 12 days after the first period ends. A started block counts in full, so those 12 days are two blocks of 10: the rate goes from 2% to 2% + 2 × 0.5% = 3%.
Flat rate or tiered rate
With a flat rate you pay the same percentage whether the broker pays in 10 days or in 60. It is easy to budget, and it is expensive when your brokers pay fast, because you pay for days you never used.
A tiered rate starts lower and climbs with every block of days the invoice stays open. It suits carriers whose brokers pay quickly. It hurts when one slow broker pushes a load into the next block. Before you sign, put in the days your slowest regular broker really takes, not the average.
Advance, reserve and when the fee comes out
The advance is what lands in your account when you submit the load. The reserve is the rest of the invoice, held until the broker pays. A 100% advance has no reserve, so the fee has to come out at funding.
A higher advance looks better, but it does not change the fee. What it changes is how much cash you hold while you wait. That is why the calculator divides the cost by the cash at funding and not by the invoice: the APR answers what you pay for the money you actually had.
Fees that change the real cost
The quoted rate is often not the whole price. These are the items to look for in the contract and add to the fixed fees, or to the rate, before you compare two offers:
- Transfer fees: same-day or wire transfers often cost more than a standard ACH that arrives a day later.
- Per-invoice charges: processing, mailing, or a credit check on each new broker.
- Fuel advance fees: if the factor advances part of a load before delivery, check whether that advance has its own fee.
- Monthly minimums: a minimum volume with a penalty if you factor less in a slow month.
- Contract length and exit fee: a term of a year or more, automatic renewal and a fee to leave early.
- Recourse period: under recourse, the number of days after which you have to buy back an unpaid invoice, and whether extra days are charged before that. Our recourse vs non-recourse factoring guide shows how to price that risk.
- Lien release: the factor usually files a public notice, a UCC financing statement, claiming your unpaid invoices (sales of accounts fall under UCC Article 9, section 9-109). Ask how and when it is released if you leave.
Why the APR matters, and where the law asks for it
A rate quoted for a few weeks looks small next to an annual rate. Turning it into an APR is the only fair way to compare a factoring offer with a line of credit, a business card or a broker's quick pay.
Two states already require it. Since 9 December 2022, California rules under SB 1235 require providers of commercial financing, factoring included, to show an estimated APR on offers of $500,000 or less. New York's commercial finance disclosure law has required the same since 1 August 2023 for offers up to $2.5 million. These rules protect the business receiving the offer, so they apply if your company is run from California or New York, wherever the factor is based. You can ask for that disclosure and check it against the calculator.
When factoring costs more than it saves
What you pay for is cash today instead of in 30 or 60 days. It is worth paying for when that cash keeps the truck moving, covers fuel, or lets you take loads from brokers who pay slowly. It costs more than it saves when:
- your brokers already pay in a week or two and you are on a flat rate;
- you have a line of credit at a lower APR and enough limit to cover the gap;
- a broker offers quick pay for a fee lower than your factoring cost on that load (put that fee in the calculator as a flat rate to compare);
- the monthly minimum forces you to factor loads you did not need to.
Questions about factoring rates and fees
How much does freight factoring cost?
It is a percentage of each invoice plus any fixed fees. On a $3,000 load with a 3% fee and a $15 same-day transfer, you pay $105. The percentage alone does not tell you the real cost: what matters is how many days your money is out and which fees are added. Put your own offer in the calculator to see the dollars and the estimated APR.
How do you calculate factoring fees?
Multiply the invoice amount by the factoring rate, then add the fixed fees per invoice (transfer, processing, credit checks). With tiered pricing, the rate goes up by a set step for each block of days the invoice stays unpaid, so a load paid in 42 days can cost more than one paid in 30.
How do you convert a factoring rate to an APR?
Divide the total cost by the cash you actually received at funding, then multiply by 365 and divide by the days until the invoice was paid. That is the method US truth-in-lending rules use for a single advance repaid in one payment. A 3% fee for 30 days is not 3% a year: with a 97% advance and the fee taken from the reserve, $3 ÷ $97 × 365 ÷ 30 is about 37.6% a year.
What is a good advance rate for trucking factoring?
A higher advance means more cash today but less money coming back from the reserve. On its own the advance rate does not change the fee, so compare offers on the total cost and the APR, not on the advance. A 100% advance with the fee taken at funding can cost the same as a 95% advance with a reserve.
Is factoring a loan?
In most factoring deals you sell the invoice to the factor, who then collects from your broker or shipper. It is not a loan in the legal sense, which is why it was rarely quoted as an APR. California and New York now require factoring companies to show an estimated APR on offers to small businesses, so the comparison with a loan is official there.
Is recourse or non-recourse factoring cheaper?
Recourse factoring usually carries a lower rate, because you buy back the invoice if the broker does not pay. Non-recourse moves part of that risk to the factor and is priced higher. Read what non-recourse covers in your contract: in many it only applies if the broker goes insolvent, not if the broker disputes the load.
Sources and method
- APR method: Regulation Z, Appendix J to Part 1026, paragraph (b)(5)(vii), single advance and single payment transactions under a year. eCFR.
- California: Department of Financial Protection and Innovation (DFPI), commercial financing disclosure regulations (California Code of Regulations, title 10), in force from 9 December 2022.
- New York: Financial Services Law, Article 8, and 23 NYCRR Part 600 (Department of Financial Services), compliance required from 1 August 2023.
- No market rates are used. Factoring companies rarely publish full price lists, so the calculator only works with the offer you enter. Checked on 8 November 2026.
Factoring in Spain works under different rules and taxes (VAT on the fee, Spanish APR method). Spanish-speaking readers have a calculadora del coste del factoring para España.