How Freight Factoring Works (and What It Really Costs)
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Short answer
- A factoring company buys your freight invoice and pays you within hours or a day, minus a fee, instead of you waiting 30-60 days for the broker.
- The real cost is the rate plus every other fee (transfers, minimums, reserves you wait on), and the contract terms.
- New authorities can usually factor right away, because factors mainly check your brokers’ credit.
How a factored load works
- You haul the load and get a signed bill of lading (BOL).
- You submit paperwork: rate confirmation, BOL and invoice, usually by phone app.
- The factor verifies the load with the broker and checks the broker’s credit.
- You get paid: the advance (often 90-100% of the invoice) minus the fee. Some factors fund only before a daily cutoff, others 24/7.
- The broker pays the factor on its normal terms. If there was a reserve, the factor releases it to you.
Example math
Illustration only, not a quote. A $2,500 load factored at a 3% flat fee with no reserve:
| Invoice | $2,500 |
|---|---|
| Factoring fee (3%) | −$75 |
| Same-day transfer fee (if charged) | varies; some charge nothing for ACH, some charge for wires |
| You receive | $2,425, usually within a day |
With a 90% advance and a 10% reserve, you’d get $2,175 now and the remaining $250 when the broker pays.
The terms that matter more than the rate
- Flat vs tiered fees. Some factors charge one flat percentage. Others charge more the longer the broker takes to pay.
- Extra fees. Ask for the complete fee schedule: ACH, wire, fuel advance, invoice processing, monthly minimum, and termination fees.
- Contract length and auto-renewal. Month-to-month vs 12+ months, and how much notice you need to give.
- All loads or your choice. Whether you must factor every invoice.
- Recourse. Who eats the loss if a broker doesn’t pay. See recourse vs non-recourse.
- UCC lien and release. How fast they release the lien and notices of assignment if you leave.
What some factors publish
| Company | What it publishes (vendor’s own words, summarized) |
|---|---|
| Bobtail | One flat rate, max 3.24% for 1-3 trucks; no reserve; month-to-month with 30 days’ notice; choose which invoices to factor; recourse; same-day before 11 a.m. ET |
| Outgo | No sign-up, cancellation or hidden fees; no annual contracts; funds within 4 hours; ACH free, wire $20; 1.0% rate on purchases with the Outgo Card |
| CFX Solutions | Same-day funding with up to 98% advance rates; 24/7 instant payouts through CFX Pay; fuel credit line of $1,500 per truck |
| OTR Solutions | Instant funding 24/7/365; “true non-recourse”; no credit check to start |
| Apex Capital | Recourse and non-recourse options; free unlimited broker credit checks; same-day and next-day funding, 24/7 for qualifying clients |
Checked October 31, 2026. Your actual rate is set in your contract.
CFX Solutions details →Get started with CFX Solutions ↗Affiliate link: we may earn a commission at no cost to you. Learn more
Just starting out? See factoring for new authority, or browse all factoring companies.
Frequently asked questions
How does freight factoring work, step by step?
You deliver the load, upload the rate confirmation, bill of lading and invoice to your factoring company, and it pays you most or all of the invoice the same or next day, minus its fee. The broker then pays the factor directly, usually 30 or more days later. If the factor held back a reserve, it releases the rest when the broker pays.
How much does freight factoring cost?
It depends on your volume, your brokers’ credit, recourse vs non-recourse, and how fast your brokers pay. Rates are mostly quote-based. Some companies publish caps or examples: for instance Bobtail lists a flat rate of at most 3.24% for 1-3 trucks with no extra fees, and Outgo says its rate drops to 1.0% on purchases made with its card. Always compare the all-in cost including transfer and monthly fees.
Is factoring a loan?
No. The factor buys your invoice. There is no loan to repay, but you do sign a contract, and the factor normally files a UCC lien on your receivables, which matters if you later want to switch or borrow.
What is a reserve in factoring?
A reserve is the part of the invoice the factor holds back until the broker pays, for example advancing 90% and holding 10%. Some factors advance close to 100% minus the fee with no reserve. A reserve is not a fee, but it ties up your cash.
Can I factor only some loads?
With some companies, yes. This is often called spot or selective factoring. Others require you to factor all invoices from the brokers you’ve assigned. Ask before you sign.
What is a notice of assignment?
It’s the letter the factor sends your brokers telling them to pay the factor instead of you. Once it is on file, paying you directly does not clear the broker’s debt, which is why leaving a factor requires a formal release.
Sources
- Bobtail factoring guide (rate cap, contract, reserve, cutoff) (checked Oct 31, 2026)
- Bobtail factoring page (checked Oct 31, 2026)
- Outgo rates and fees (checked Oct 31, 2026)
- CFX Solutions home page (advance rate) (checked Oct 31, 2026)
- OTR Solutions FAQ (checked Oct 31, 2026)
- Apex Capital freight factoring (checked Oct 31, 2026)
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