How Much Does Freight Factoring Really Cost, and Is Broker Quick Pay Cheaper?

What freight factoring costs, from the fleet’s own statements

Two numbers answer the cost question, and both come from last year’s factoring statements and the agreement, not from anyone’s rate sheet.

The first is dollars a year: every fee line on the year’s statements, including the factoring fee on each invoice, transfer and wire charges, fees on rejected invoices, any monthly minimum, and fees on invoices handed back. Illustrative example, invented numbers: a hypothetical 15-truck fleet factored $3.0 million of invoices last year at a flat 3 percent, which is $90,000, and paid $15 for each of 250 same-day transfers, another $3,750. Factoring cost it $93,750 for the year. That figure belongs next to the year’s operating profit, not next to revenue.

The second is a yearly rate, and New York and California each require one when a factor makes an offer their laws cover. New York’s Financial Services Law §806 calls for an “estimated annual percentage rate,” computed under federal Truth in Lending rules as a “single advance, single payment transaction”; §802 exempts financial institutions such as banks, deals over $2.5 million and some other cases. California’s Financial Code calls for a disclosure the recipient signs, on offers of $500,000 or less, that includes “the total cost of the financing expressed as an annualized rate,” which a factor may show as an example transaction (§22803); depository institutions such as banks are exempt (§22801). If either law covered the offer, the disclosure belongs in the fleet’s file. Whether either law reached a given agreement is a question for an attorney; this is not legal advice.

Either way, the fleet can work its own rough rate per broker. A flat fee costs the same whether a broker pays in 20 days or 50, but the cash arrives early by a different number of days. The rate is the fee, divided by the cash received early, times 365, divided by the days it arrived early. The statement gives the days: the date the factor funded the invoice and the date the broker paid it. In the same invented example, a $2,000 invoice carries a $60 fee, and the advance is 90 percent, or $1,800:

• Broker pays 50 days after funding: $60 ÷ $1,800 × 365 ÷ 50, about 24 percent a year.
• Broker pays 35 days after funding: about 35 percent a year.
• Broker pays 20 days after funding: about 61 percent a year.

Under a flat fee, the brokers that pay fastest carry the highest yearly rate to factor. Under a fee that grows with the days, the arithmetic changes, which is why the rate is worked from the agreement’s own schedule, broker by broker. It is a simple rate, not the annual percentage rate the New York rules describe, but it sets factoring next to a line of credit or a quick-pay fee on the same yearly footing.

Quick pay or factoring: which costs less, broker by broker

Quick pay is a broker paying the carrier sooner than its standard terms in exchange for a fee taken out of the payment. C.H. Robinson’s annual report for 2025 describes its own version: cash advances of up to 60 percent when a load is picked up, and faster final payment on proof of delivery in exchange for a smaller payment. Terms and fees differ by broker, so compare per load, in dollars, with a third option beside it: waiting for the standard terms and carrying the gap from cash or a line of credit.

Illustrative example, invented fees and terms, on a $2,000 load, with factoring at a flat 3 percent, or $60:

• Broker A pays 45 days after the invoice and offers quick pay in 2 days for 2 percent: $40, which is $20 less than factoring. Carrying the $2,000 for those 45 days on a line at a hypothetical 12 percent a year would cost about $30, the cheapest of the three on these numbers.
• Broker B pays 25 days after the invoice and charges 5 percent for quick pay: $100. Factoring is cheaper at $60, and waiting the 25 days on the same hypothetical line would cost about $16.
• Broker C pays in 20 days and offers no quick pay. Factoring still costs $60, the highest yearly rate on the list, against about $13 to wait on the same line. This is the load to wait on when the fleet can.

Two things decide whether mixing is allowed at all. First, the factoring agreement may require every invoice, or every invoice from listed brokers, to go to the factor; leaving one out may breach it. Second, once a broker holds the factor’s notice of assignment, §9-406(a) says it settles only by paying the factor, so a quick-pay payment on that broker’s load goes to the factor too. Mixing takes the factor’s written agreement, broker by broker. For the broker’s side of the same arithmetic, what quick pay costs the brokerage that offers it, see the guide on freight broker quick pay against shipper terms.

Why it takes so long to get paid in trucking, and the days a carrier controls

The wait from delivery to cash is a chain of segments, and each one belongs to someone. A carrier cannot change a broker’s terms after the load is booked, but the first three segments are largely its own.

• Delivery to complete paperwork: the signed BOL or POD, readable, plus lumper receipts and the in and out times that support a detention charge. Owned by the driver and dispatch.
• Paperwork to invoice or factoring submission. Owned by billing. Where a broker’s terms count from receipt of the invoice, every day here is a day added before its clock starts.
• Submission to acceptance. A packet rejected for an unreadable POD, a rate that does not match the rate confirmation or a missing receipt restarts this segment. Owned by billing; a checklist before sending fixes it.
• Invoice to due date: the terms on the rate confirmation or the broker-carrier agreement. Set at booking, which is the moment to ask about quick pay or terms.
• Due date to payment: the broker’s own pace, plus any dispute or short-pay. Shaped by which brokers the fleet books and how fast it answers a dispute with documents.
• Payment to cash: the factor’s transfer and later the reserve release, or the deposit clearing when the broker pays the carrier directly.

The weekly record is one row per delivered load with five dates: delivered, paperwork complete, submitted, accepted and paid. Billing keeps it, and the owner reads it on Monday. Sorted by broker, it gives each broker’s actual days against its terms, the number the quick-pay comparison above needs. Illustrative example: a hypothetical load delivered on a Tuesday has its POD photo in billing on Friday, is submitted Monday, is rejected Wednesday for a missing lumper receipt and is resubmitted Friday. Ten days pass before a broker whose terms count from a complete invoice starts counting at all.

Should a growing fleet factor at all?

Factoring can be a reasonable trade while a fleet grows, because each added truck adds receivables before its first payment arrives. The question is what that speed costs against the alternatives the fleet can actually get, and its own numbers answer it.

Illustrative example, continuing the hypothetical fleet: $3.0 million a year, with brokers paying on average about 37 days after the invoice, means that without factoring about $300,000 would be owed to the fleet on an ordinary day. Factoring that volume cost $93,750 last year. Carrying the same $300,000 on a line of credit at a hypothetical 12 percent a year would cost about $36,000. The difference, about $58,000, is the price of funding the fleet may not qualify for elsewhere, plus whatever services the agreement includes, such as broker credit checks or collections. Whether that is worth it is the owner’s decision, made with the accountant.

• Fits: no bank will extend a line yet, and payroll, fuel and settlements cannot wait for brokers’ terms.
• Fits: the broker mix pays slowly, so the yearly rate per broker is low.
• Second look: a large share of the volume goes to brokers that pay within a few weeks, where the yearly rate is highest.
• Second look: a bank would lend against the same receivables, for example under the SBA’s Working CAPLine, which the SBA describes as “an asset-based revolving line of credit.”
• Second look: the cash problem is the days before the invoice. Factoring does nothing for a POD that sits in a truck for a week.
• Second look: the agreement’s term, minimums or termination charge would keep the fleet in longer than the need lasts.

Factoring everything, nothing, or only the slow brokers are three different decisions, and the per-broker rates show which loads carry the cost. For an owner planning a bank line later: a filed UCC-1 is public, and a bank reviewing an application can see it.

How to get out of a factoring contract, step by step

Getting out runs on two sets of rules. The agreement sets the notice, the fees and what happens to open invoices; the UCC governs where brokers pay and when the public filing comes off. What follows is a plain reading of the uniform text, not legal advice: each state enacts its own version, and an attorney should read the agreement before a notice goes out.

• Find five clauses: the term and renewal date; the termination notice, meaning how many days before which date, to whom and by what method; any early termination fee or minimum-volume charge; what happens to invoices still open at exit; and when the last reserve is released.
• Put the notice deadline on the calendar, send the notice the way the clause names, and keep the proof of sending.
• Ask in writing for an exit statement as of a set date: open invoices, advances outstanding, fees, any termination charge, and the reserve to be returned.
• Decide the open invoices: let them run off, with brokers paying the factor and the reserve released as each one closes, or have a new funder pay the old factor the exit figure.
• Change where brokers pay. Under §9-406(a), a broker holding the factor’s notice settles only by paying the factor, so expect each broker to want a written release from the old factor before it changes where it pays. Ask the factor for one per broker, then send the new payment instructions. A broker that receives a new notice of assignment can ask the new assignee for reasonable proof of it (§9-406(c)).
• Clear the public filing. For an LLC or corporation, the filing is made in the state where it was organized (§9-301(1), §9-307(e)), so search that state’s filing office for financing statements naming the company. Once the brokers have paid the invoices that were sold or, where the filing secures a debt, nothing is owed and no more advances are committed, §9-513(c) gives the factor 20 days after an “authenticated demand,” meaning one signed on paper or electronically (§9-102), to send or file a termination statement. If it does not, §9-509(d)(2) lets the debtor authorize the termination filing itself, and under §9-625(e)(4) the debtor can recover $500 on top of any damages.
• Close the books: every invoice matched to its payment, every reserve released, and the final statement reconciled before signing any release the factor asks for.

When a factor keeps holding a reserve after every invoice has closed, or will not send release letters, the clause in the agreement is the first lever and a written demand the second. The UCC’s 20-day rule covers the public filing, not the reserve; money held under the contract is a question for the fleet’s attorney.

When to leave factoring alone, and where the Review fits

Leave it alone when the yearly rate per broker holds up against the alternatives the fleet can actually get, the statements reconcile every week, and the agreement does not hold the fleet past its need. Switching has its own costs: the termination charge, a release letter for every broker, and payments landing in the wrong place if one broker misses the change. A fleet whose settlements depend on the next advance lines up the replacement before it sends notice.

For an owner-led fleet, the Revenue Review counts this under the Invoice → Payment hand-off. From read-only exports of the factoring statements, the TMS or load sheet and the bank, it rebuilds the five dates for every delivered load, splits the wait by segment and by broker, totals what factoring cost last year in dollars and as a yearly rate per broker, and lists the brokers where quick pay or waiting would have cost less. It does not recommend a factor, a lender or a contract, contact brokers or the factor, or give legal advice. It takes two weeks, and the report is the company’s to keep.

If the days to cash turn out to be the gap, the next step is a free 20-minute call, where we say whether the per-broker rates above, worked in-house from a year of statements, already cover it; if they do, we say so.