Common Freight Factoring Fee Structures for Trucking

Common Factoring Fee Structures for Trucking 

Depending on the industries they serve and the customer needs they are focused on, Invoice Factoring Companies provide differing fee structures. Typically, factoring fees are arranged in one of four different ways:

  • Tiered
  • Daily
  • Prime Plus
  • Flat Fee
  • Which Structure is Best for Your Trucking Company?

Tiered Factoring Fee

A tiered factoring fee is typically accrued in tiers of 10 or 15 days, although it may be calculated on a monthly, weekly, or daily schedule.

A standard tiered factoring fee arrangement looks something like this:

  • Invoice value: $1,000.00
  • Advance rate: 95% ($950.00)
  • Factoring fee: 1.5% for 15 days
         - plus an additional 1.0% each time the unpaid invoice passes 15 days
  • Fee schedule:
a table that outlines a tiered factoring structure


In the above example, the trucking company would pay only $15.00 if their customer pays the invoice within the first 15 days. However, most of the time invoices are paid in greater than 30 days. If your customer pays in 31 days, the factoring fee would be $35.00.


Daily Factoring Fee

A daily factoring fee is calculated each and every day the invoice is outstanding.

A standard daily factoring fee arrangement looks like this:

  • Invoice value: $1,000.00
  • Advance rate: 95% ($950.00)
  • Factoring fee: 0.10% per day
  • Fee calculations if invoice is paid on day:
Daily Freight Factoring Fee


In the above example, the trucking company would pay only $15.00 if their customer pays the invoice in 15 days. If a customer pays in 31 days, the factoring fee would be $31.00.


Prime Plus

A Prime plus factoring fee is calculated each and every day an invoice is outstanding. The rate is the current prime lending rate plus a per annum rate calculated daily. A standard rate that could be offered is “prime + 3.5%.” If the current prime rate is 4%, the rate would be 7.5% per year.

Selling an invoice at a rate of prime + 3.5%, the fee would look like this:

  • Invoice value: $1,000.00
  • Advance rate: 95% ($950.00)
  • Factoring fee: Prime + 3.5% (total 7.5%, or 0.02055% per day)
  • Fee schedule:
Prime Plus Annum Freight Factoring Fee 


Similar to an installment loan, interest is accrued every day until the loan is repaid. The earlier the customer pays, the cheaper the factoring fee.


Flat Fee

Flat fee factoring is the preferred choice by many owners of trucking companies.

The easiest fee to calculate and usually the most cost effective is Flat Fee Factoring. The fee is a percentage of the invoice, a one-time cost for a set period of time; usually 60 or 90 days. No matter when the customer pays their invoice within the set time period, the fee will be the same.

A flat fee on a $1,000 invoice looks like this:

  • Invoice value: $1,000
  • Advance rate: 97% ($970.00)
  • Factoring fee: starting from 1.59% ALL-IN for 90 days
  • Fee schedule:
Flat Fee Freight Factoring


Flat fee factoring is commonly available to Transportation Companies and is the preferred choice by many owners of Trucking Companies.
 


Which Structure is Best for Your Trucking Company?

The industry favorite among many Trucking Company owners is Flat Fee factoring. The simple to calculate fee and the low rate is the ideal cash flow solution for busy trucking companies on the move.  

Look for:freight factoring companies that offer flat fee factoring featuring a one time ALL-IN cost for 90 days.

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