Invoice Factoring Rates

Compare More Than Just Rates

Do you have unpaid invoices that you need to turn into working capital? A factoring company can help but this is not as cut and dry as a cash advance. Before you rush into signing up for factoring services with the first company you find, let’s cover some of the things you want to look for. When deciding between invoice factoring companies, don’t take companies at face value and get caught up in the marketing lure of who the best factoring company is. You need to make sure you understand the true workings of the company that you are putting in charge of your accounts receivable. Comparing rates is not as important as actually reviewing the total factoring COSTS of selling your invoice vs the value of the invoice. You want to look at the additional fees such as per invoice fees, high aging fees, setup costs, minimums, etc. add to the cost of factoring. Taking this into consideration can make a big difference for small business owners. At the end of the day, the whole reason you are factoring is to improve your cash flow.

If “John Trucker” has a $1,000 invoice and sells it to ABC Factoring at a 2% rate, you would expect to receive $980 for the invoice. But did he remember to ask about their factoring fee structure before signing up? Does he even understand the payment terms? ABC Factoring charges a $5 invoice submission fee and a $15 invoice processing fee. Now he’ll only receive $960 for his invoice, turning that 2% rate into 4%. This does not include the same-day advance fee, setup costs, required reserves, ELD transaction fees, or aging fees. Soon he will be running himself ragged simply to keep his business going. No one likes wasting money on fees.

Don’t fall victim to the “teaser” lower rates. Sometimes this rate only remains good if the invoice pays within a very short amount of time, then jumps up before your customer pays within their standard terms. The next time you are comparing factors, ask questions to find the TRUE COST of their program.

With TAFS, you work with a factoring partner who believes in keeping costs low and straightforward. We are transparent and upfront with the true cost of factoring, even sending a summary statement that breaks down all the costs after every transaction. In fact, our sales team will even walk you through our factoring agreement and give you a chance to ask questions. Every day, we receive phone calls from actual clients like “John Trucker”, who signed with a factoring company because of a great rate, only to realize he was paying much more. TAFS can help.

Items that Impact Factoring Cost

The factoring process can seem very cut and dry with a flat fee. There are some things, however, that can impact your overall factoring cost with additional fees beyond just the rate. These are important to keep in mind because they can affect the overall invoice value. One such thing would be the aging of invoices. When a factor does not advance the full amount there is a good likelihood there will be aging fees in the contract. This will increase your cost with the factoring company. The longer your customer takes to pay, the more you pay in “aging fees”. You will also want to note the “clearance days” for checks. Your factoring company may have 7 days of clearance, which means 7 days after they receive the check they apply it to your account. For example, your customer pays the factor in 38 days and they have 7 clearance days, that check will post to your account on day 45, possibly increasing your aging fee.

Different Ways Companies Can Charge

The main two structures that you hear about in how factoring companies charge are that of recourse factoring and non-recourse factoring. Simply put recourse factoring would be if your customer fails to pay the invoice then the factoring company then bills you back for that amount. A non-recourse structure claims that they will not come after you, but there is some small print there to watch out for. The truth is, All factoring companies will recourse you if your customer simply does not pay or pays late, leaving you with outstanding invoices. It is really just a matter of when they will collect from you. Remember, factoring companies are not in the business of giving away free money. All factoring companies have language in the contract to make sure it can collect from you if your customers fail to pay in a timely fashion. It is important here to utilize the business credit checks to get a better idea of the creditworthiness of your customers.

Opportunity Cost of Not Factoring

In trucking, as in all businesses, to make money, it takes money. Some of the larger carriers out there are able to float the time between running the loads and actually getting paid for it, but they still use factoring to help them expand and grow. With the high monthly costs to run a trucking company like fuel, insurance, truck payments and maintenance, this adds up very quickly and most need that invoice paid ASAP. Without an ability for invoice financing, many would not have the capital needed to cover fuel and other expenses for the next load.


When I first started my company, I wanted to do everything myself. But I quickly realized I couldn’t run my business without a factoring company. Throughout the onboarding process, TAFS accommodated my needs and went above & beyond to make it work for me & my business to join. I’ve been with TAFS ever since. I’ve had factoring company after factoring company call me, and I always tell them “I’m staying with TAFS.” The other companies just don’t have the added benefits that TAFS does.

– Joseph S., Owner/Operator