Factoring Cost Calculator
A "3% factoring fee" sounds like a small haircut. It isn't — 3% for 30 days of waiting is a completely different number once you annualize it. This calculator does that math for you before you sign a factoring agreement, not after.
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How this is calculated
effective APR = fee % × 365 ÷ days you'd wait
Compare factoring companies
- OTR Solutions — no-recourse factoring, trucking-specific
- Bobtail — flat-fee factoring
FAQ
What is invoice factoring?
You sell an unpaid invoice to a factoring company for a fee, and they pay you most of it today instead of you waiting the 30-45 days a broker would normally take to pay. The factor then collects the full invoice amount directly from your customer when it comes due.
Recourse vs. non-recourse factoring — what actually changes?
With recourse factoring, you eat the loss if your customer never pays — the factor can claw the advance back from you. With non-recourse factoring, the factor eats that risk instead. Recourse is cheaper precisely because you're the one still holding the credit risk; non-recourse costs more because the factor is.
When does factoring beat a bank line of credit?
When you can't get a bank line at all — new authority with no credit history, thin personal credit, or nothing to put up as collateral. Factoring approves based on your customer's credit, not yours, and pays out in a day or two instead of the weeks a bank takes to underwrite a line. If you already qualify for a cheap bank line, that's usually the less expensive option long-term.
How do I actually compare factoring offers?
Never compare on the sticker fee alone — it's designed to look small. Line up three numbers together: the fee percentage, the advance rate (what share you get up front vs. held back in reserve), and any monthly minimums or per-invoice charges. A "2%" offer with an 85% advance rate and a $500 monthly minimum can cost you more than a "3%" offer with a 97% advance and no minimum.