Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Fee per invoice
$96.00
Implied annualized rate
36.5%
Net proceeds received
$3,104.00
Total monthly factoring cost
$960
Total annual factoring cost
$11,520
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How to use this
- 1Enter invoice amount ($).
- 2Enter factoring fee (%).
- 3Enter days shipper would normally take to pay (days).
- 4Enter invoices factored per month.
- 5Read your fee per invoice on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
Factoring companies advance cash against unpaid invoices for a fee, usually quoted as a flat percentage of invoice value regardless of how many days until the shipper would have paid anyway. That flat fee hides a much higher effective annual rate once you account for the short time period involved — a 3% fee for turning a 30-day payment into a 1-day payment is roughly a 36%+ annualized cost of capital. This calculator converts your factoring fee into both the dollar cost per invoice and the implied annual percentage rate so you can compare it honestly against a business line of credit or simply improving cash reserves to avoid factoring altogether.
Worked example
Using the values the calculator loads with:
Inputs
- Invoice amount: 3200 $
- Factoring fee: 3 %
- Days shipper would normally take to pay: 30 days
- Invoices factored per month: 10
Results
- Fee per invoice: $96.00
- Implied annualized rate: 36.5%
- Net proceeds received: $3,104.00
- Total monthly factoring cost: $960
- Total annual factoring cost: $11,520
What each field means
Inputs
- Invoice amount ($)
- The invoice amount used in the calculation, measured in $. Starts at 3200 $ so you have a working example on load.
- Factoring fee (%)
- The factoring fee used in the calculation, measured in %. Starts at 3 % so you have a working example on load.
- Days shipper would normally take to pay (days)
- The days shipper would normally take to pay used in the calculation, measured in days. Starts at 30 days so you have a working example on load.
- Invoices factored per month
- The invoices factored per month used in the calculation. Starts at 10 so you have a working example on load.
Results
- Fee per invoice
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Implied annualized rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Net proceeds received
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total monthly factoring cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total annual factoring cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why is the annualized rate so much higher than the fee percent?
A flat fee for a short waiting period compounds badly when annualized. A 3% fee to skip 29 days of waiting, repeated all year, is economically similar to a 36% annual interest rate — factoring is fast cash, not cheap cash.
When does factoring still make sense despite the cost?
When cash flow gaps would otherwise force you to decline loads, miss a truck payment, or take on high-interest debt elsewhere. For new owner-operators without 30 days of payroll cushion, factoring is often the only realistic bridge in year one.
Are there cheaper alternatives?
Non-recourse factoring costs more than recourse factoring. Quick-pay programs offered directly by brokers (often 1-2% for payment in 24-48 hours) are frequently cheaper than a full factoring contract if your broker mix supports it.
Does factoring show up on my customer's side?
Yes, most factoring requires the shipper or broker to be notified and to remit payment directly to the factoring company via a notice of assignment, which some brokers view neutrally and some avoid working with entirely.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Freight Factoring Fee Cost Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/factoring-fee-cost
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/factoring-fee-cost" target="_blank" rel="noopener">Freight Factoring Fee Cost Calculator — RevenueLab</a> (2026).</p>
Source: [Freight Factoring Fee Cost Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/factoring-fee-cost) (2026).