Typical Factoring Rates in the Trucking Industry
Updated: Sep 14, 2020
When shopping around for freight factoring companies to work with, finding the best rate is typically the most important thing on your mind. The decision to use freight factoring to keep your cash flow consistent is critical in growing your company, and while the rate is a major factor, it's important to understand exactly the decision behind each rate. Finding a low rate doesn't necessarily mean you've found the best one.
What affects your freight factoring rate?
There are two main things that affect your freight factoring rate - the factor's risk when buying your invoices and your monthly freight factoring volume. Typically, low risk invoices and high monthly volume will qualify you for a lower rate and visa-versa. Your credit history and trustworthiness, how many years you've been in business, and how many trucks you run are a few more factors that may play a small part in determining your freight factoring rate.
But just because you're offered a low rate, doesn't mean it's the best rate. It's important to understand that a lot of factoring companies do not look out for your best interest like Porter does. You will often run into situations where you think you're getting a low rate, but the contract is full of hidden terms and fees. So, instead of that 1.5% the sales guy told you about, you're really being charged more than 4% because of monthly minimums, up-charges, and more.
Typical freight factoring rates
In the trucking industry, freight factoring rates typically range from 1% to 5%. The factors that accompany each of these rates may vary. Look at your contract thoroughly to see if there are any hidden terms and fees before you sign. You may think you're getting same day pay, but the terms in your contract may state an extra fee to get paid in less than 30 days. You may think you can factor as little as you want each month, but your contract might state if you do not hit your minimum requirement you will get charged extra.
*This information isn't to scare you, it's to educate you into making the best decision for your trucking company. Not all factoring companies are like this, but you will run into some that are.
Porter Billing Services offers flat rate pricing - what you see if what you get. There are no hidden terms or fees in your contract, and if you are skeptical, we will read through the entire contract with you. When you send your bills in on time, you will always get paid within 24 hours without being charged extra. Learn more about all the other benefits Porter has to offer!
For more information on how we can help you grow your trucking company, call us today at (205) 397-0934 or get your free quote here.