Factoring calculator
Enter an invoice amount, factoring fee, and advance rate to see the cash advanced today, the reserve held, the fee cost, your net proceeds, and the true effective annualized cost of the money. Nothing is saved; the math runs in your browser.
You keep
$9,700
net proceeds
Effective APR
41%
cost of the money
- Invoice amount
- $10,000
- Advance paid today90%
- $9,000
- Reserve held10%
- $1,000
- Fee cost3%
- -$300
- Reserve released when paid
- $700
- Net proceeds
- $9,700
The fee is $300.00 (3.00% of the invoice) to get $9,000 about 30 days early — an effective 41% APR.
What you actually pay to get paid early
Factoring turns a 30-to-60-day receivable into cash today, and for a new carrier that cash flow can be the difference between taking the next load and parking the truck. But the fee is easy to under-estimate. Three percent sounds small until you realize you’re paying it to move money forward by a single month.
The effective APR is the number to watch
A 3% fee on a 30-day invoice is an effective annual cost near 40%, because the fee buys you the advance for only about a twelfth of a year. The faster your customer would have paid anyway, the higher the effective APR of factoring that invoice. This calculator surfaces that rate so you can compare factoring to a line of credit, a fuel-card program, or simply floating the receivable yourself.
When factoring makes sense
Factoring earns its fee when the early cash unlocks revenue you couldn’t otherwise capture — another load, payroll, a repair that keeps you rolling. It costs you margin when you factor out of habit on invoices you could carry. Either way, the packet the factor wants — invoice, rate confirmation, and signed POD — is the same paperwork BrokerLane assembles for you the moment a load delivers.
Frequently asked questions
- How does freight factoring work?
- You sell an unpaid invoice to a factoring company for cash today instead of waiting 30 to 60 days for the broker or shipper to pay. The factor advances most of the invoice up front (typically 90–97%), holds the rest as a reserve, and charges a fee. When your customer pays the factor, they release the reserve back to you minus that fee. It trades a slice of the invoice for immediate cash flow.
- How much does factoring cost?
- The headline fee is usually 1%–5% of the invoice, sometimes with a flat ACH or wire fee on top. But the real cost is the effective annualized rate: a 3% fee to get paid 30 days early works out to roughly a 40% APR, because you are paying that fee for only about a month of early cash. This calculator shows both the dollar fee and the effective APR so you can compare it to other financing.
- What is the advance rate and reserve?
- The advance rate is the percentage of the invoice the factor pays you immediately — say 90% of a $10,000 invoice, or $9,000. The remaining 10% ($1,000) is the reserve the factor holds until your customer pays. Once paid, the factor releases the reserve minus its fee. A higher advance rate puts more cash in your pocket up front but doesn't change the total fee you pay.
- Is factoring worth it for owner-operators?
- It depends on your margins and how badly you need the cash flow. If waiting 45 days for payment would stop you from taking the next load or making a truck payment, the fee can be worth it. If you can comfortably float receivables, that same fee is pure margin you're giving away. Run your invoice through the calculator, look at the effective APR, and weigh it against what the early cash actually lets you do.