What is the difference between recourse and non-recourse factoring?

With recourse factoring, if your customer does not pay, the factoring company can charge the unpaid invoice back to you. With non-recourse factoring, the factoring company absorbs the loss if a customer defaults — but only for specific credit-approved reasons, and the rate is typically higher. Read your contract carefully.

Is factoring worth it for an owner-operator?

Factoring solves a real cash flow problem — brokers and shippers often pay on 30–60 day terms, while your fuel and expenses are due immediately. Whether it is worth the fee depends on your need for fast cash, your ability to negotiate better rates, and whether you can qualify for a fuel advance program instead.

What does the reserve mean in factoring?

The reserve is the portion of your invoice held back by the factoring company until your customer pays. For example, with a 90% advance rate, the factoring company holds 10% in reserve. Once your customer pays, you receive the reserve minus the factoring fee. Some companies hold the reserve in a rolling account.

Factoring Fee Calculator

See exactly how much freight factoring costs per invoice and per month. Enter your invoice amount, factoring rate, and advance rate to understand what you keep and what you pay.

Estimates only — not financial advice.

Enter your invoice details and click Calculate.

What you're actually paying for

Freight factoring lets you sell your invoices to a third party (the "factor") in exchange for fast payment — typically within 24–48 hours. The advance is the portion you receive upfront, the reserve is held back until the broker or shipper pays, and the factoring fee is what the factor keeps. This calculator shows all three numbers clearly.

Recourse vs. non-recourse

Recourse factoring: If your broker or shipper does not pay, the factoring company can charge the unpaid invoice back to you. Rates are typically lower.

Non-recourse factoring: The factor absorbs the loss if a customer defaults — but only for specific approved credit reasons. Rates are higher, and the protection is often more limited than it sounds. Read the contract carefully before signing.

This calculator does not distinguish between recourse and non-recourse structures. Consult the factoring company directly for the terms that apply to your contract.

Formula

Factoring Fee = Invoice Amount × Factoring Rate

Advance Amount = Invoice Amount × Advance Rate

Reserve = Invoice Amount − Advance Amount

Net Before Reserve = Advance Amount − Factoring Fee

Monthly Fees = Factoring Fee × Invoices Per Month

Example

A $2,000 invoice at 3% factoring rate and 90% advance rate: Advance = $1,800. Fee = $60. Reserve = $200. Net received upfront = $1,740. When the customer pays, you receive the $200 reserve. Total received = $1,940. Total cost = $60 (3% of invoice).

Frequently Asked Questions

What is the difference between recourse and non-recourse factoring?: With recourse factoring, if your customer does not pay, the factoring company can charge the unpaid invoice back to you. With non-recourse factoring, the factoring company absorbs the loss if a customer defaults — but only for specific credit-approved reasons, and the rate is typically higher. Read your contract carefully.
Is factoring worth it for an owner-operator?: Factoring solves a real cash flow problem — brokers and shippers often pay on 30–60 day terms, while your fuel and expenses are due immediately. Whether it is worth the fee depends on your need for fast cash, your ability to negotiate better rates, and whether you can qualify for a fuel advance program instead.
What does the reserve mean in factoring?: The reserve is the portion of your invoice held back by the factoring company until your customer pays. For example, with a 90% advance rate, the factoring company holds 10% in reserve. Once your customer pays, you receive the reserve minus the factoring fee. Some companies hold the reserve in a rolling account.

Disclaimer: This calculator is for estimation purposes only and does not constitute financial advice. Factoring agreements vary significantly. Additional fees such as ACH fees, same-day wire fees, or monthly minimums may apply. Review your specific factoring contract carefully before signing.