What’s my factoring rate?

What drives your factoring rate

The headline rate a factor quotes is built from five inputs. Each one moves the rate independently, and the strongest two — volume and broker mix — can compound into a 1.5 – 2 point swing on the same invoice. Knowing which inputs you control tells you where to push for a better rate.

• Volume.Factors price in tiers. Under 10 loads a month, you sit in the “new authority” pricing band — typically 4 – 5%. Between 10 and 30 loads, the rate drops to 3 – 3.5%. Above 30 loads, fleets unlock 2 – 2.5%. The reason is operational: a factor’s fixed cost to onboard you, run broker checks, and process payments doesn’t scale with invoice count. Higher volume amortizes that fixed cost across more revenue, and the factor shares the savings. The corollary: shopping rate without committing to a volume tier is a fool’s errand — the lower advertised rates assume a volume you may not hit.
• Broker credit mix.Factors don’t price your credit; they price your brokers’. If 60% of your loads run through three blue-chip brokers (Coyote, CH Robinson, TQL), your rate floor sits lower because broker default risk is near zero. If your mix concentrates on small/regional brokers or quick-pay schemes, the factor adds 25 – 75 basis points for risk. Mix is the single biggest rate-mover you can change in 60 days: routing more loads through credit-screened brokers visibly improves your rate at renewal.
• Recourse type. Recourse means you owe the factor back if a broker defaults. Non-recourse means the factor eats the loss in exchange for a 0.5 – 1% premium. Non-recourse is real insurance, not a label — but only for credit defaults. Disputes, chargebacks, and slow-pay penalties typically stay on you regardless. For carriers with concentrated broker exposure, non-recourse pays for itself on a single bad debt. For diversified fleets, recourse is the cheaper math.
• Contract length.Month-to-month is the most expensive way to factor. 12-month commitments typically price 0.25 – 0.75% lower. 24-month commitments price another 0.25% under that. The factor is buying predictability of revenue; you’re paying for flexibility. The trade-off becomes obvious when you do the math: on $400K of annual factored revenue, a 0.5% rate cut is $2,000/yr — meaningful, but worth running against the cost of being locked in if your broker strategy changes.
• Operating history.Twelve months of clean operating history shifts you from the “new authority” pricing band into the standard band. The shift is typically 0.5 – 1% — a brand-new MC# pays 4 – 5% where a 12-month-old MC# with the same volume pays 3 – 3.5%. The reason is fraud prevention: new authorities show a statistically higher rate of bond claims, fraudulent invoices, and broker disputes. Time on the road is the cheapest signal you can build.

Typical rates by operator profile

Below are the rate bands we see across the panel. These are observed ranges, not guarantees; the chosen factor sets the final number on the contract.

• Brand-new MC#, single truck, mixed broker mix. Rate band: 3.5 – 5%. The “new authority” bucket. Volume is low, history is zero, broker exposure is unknown. The high end of this range is common in month one; rates compress as the first 3 – 6 months of clean operation build a track record.
• Established owner-op, 12+ months history, stable broker mix. Rate band: 2.5 – 3.5%. This is the most common profile on the Dispatched panel. The 12-month history clears the new authority adder, and a stable mix sets a sensible price floor. Operators in this profile who switch from spot factoring to a 12-month contract typically save 0.5%+.
• High-volume fleet (30+ loads/month), strong broker mix. Rate band: 1.5 – 2.5%. Volume tier unlocks the lowest pricing, and a concentrated mix on blue-chip brokers eliminates the broker risk adder. Fleets in this band negotiate hard on advance rate (97%+) and ACH/wire fee waivers; the headline rate is only one line on the contract.
• Non-recourse + concentrated broker risk. Rate band: 2.5 – 4%. Non-recourse adds 0.5 – 1% over the recourse equivalent for the same profile. If your operation runs 70%+ through one broker, non-recourse is often the right call — one default on a recourse contract can wipe out a year of fee savings.

Hidden costs that change the effective rate

The headline factoring rate is the cleanest number on the contract — and the least useful number for comparing factors. These line-item charges quietly add 0.25 – 1% to the effective cost, and they vary widely from factor to factor.

• ACH fees.Some factors charge $5 – $25 per ACH wire on top of the rate. At 20 wires a month, that’s $100 – $500 — material on a small-volume account. Same-day wires often carry an additional $15 – $30 premium. Negotiate a flat ACH allowance or fee waiver before signing.
• Monthly minimums. Many factor contracts include a minimum monthly fee — typically $100 – $300 — that kicks in if your factored volume drops below threshold. For carriers with seasonal volume, this becomes the floor rate in slow months. Ask explicitly what the minimum is and how it behaves if you run a partial month.
• Lockbox fees.Some factors charge $25 – $100 per month for the lockbox the brokers pay into. This is pure overhead — the lockbox isn’t doing extra work — and it’s often negotiable down to zero on a 12-month commitment.
• Early termination clauses. Annual contracts often include 60 – 90 day cancellation windows and early-termination penalties of 1 – 3 months of average fees. Read the auto-renewal clause carefully — many roll forward automatically unless you cancel inside a narrow window.
• Fuel-advance and quick-pay fees. If you take fuel advances against not-yet-uploaded invoices, the factor charges a separate fee — typically 1 – 3% of the advanced amount. These can be useful tools, but model them as extra cost, not free convenience.

How to make your rate go down

Four practical actions, in order of impact:

• Stabilize broker mix. Route 50%+ of your volume through 3 – 5 credit-screened brokers (Coyote, CH Robinson, TQL, JB Hunt, Convoy alternatives). At renewal, the factor sees a clean concentration profile and prices it accordingly. This single change is worth 25 – 75 basis points for most operators.
• Increase volume.Crossing the 10-load and 30-load monthly thresholds unlocks new pricing tiers. If you’re consistently running 8 – 9 loads, pushing to 11 – 12 is often worth a half-point rate cut. The factor won’t volunteer this; you have to ask at renewal.
• Sign 12-month vs month-to-month. The 0.25 – 0.75% rate cut for a 12-month commitment is real money on even modest volume. The decision is about your strategy runway — if your operation is stable enough to commit a year, take the rate cut.
• Demonstrate operational maturity. Twelve months of clean operation, no broker disputes, no bond claims, no late uploads. Factors track these signals quietly. Operators with clean records get rate adjustments at renewal that operators with messy records do not — even at similar volume and broker mix.

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