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Factoring vs broker quick pay: compare the real cost per day
Both options get you paid before the broker’s normal pay date. Factoring sells the invoice to a third party. Quick pay is an early-payment option offered by the broker for a fee. A percent fee tells you little until you turn it into cost per day early.
In short
- Compare by effective annual cost: fee ÷ cash received × 365 ÷ days paid early.
- A lower fee paid on a longer wait can cost more per day than a higher fee on a short wait.
- Factoring may carry recourse, a reserve, minimums and chargebacks. Quick pay usually applies per broker. Read the terms. verify
- We name no providers and quote no market fees. Use the numbers on your own schedule.
A percent is not a price until you add days
Take the same $3,000 invoice, paid by the broker on day 30. With quick pay at an invented 3%, cash arrives on day 5, so you are paid 25 days early. With a factor at an invented 2.5%, cash arrives on day 1, 29 days early. A bank credit line at an invented 12% a year costs 12% for 30 days.
Converted to a simple annual rate, the quick pay costs the most per day, even though its percent looks near the factor’s. The credit line costs least per day but needs approval and a limit.
The picture uses invented fees. Your own schedule and your own days will move every bar.
How to compare, step by step
Pick a real invoice
Use one from last month: amount, broker, and the day it was actually paid under normal terms.
List every charge
Percent fee, ACH or wire fee, reserve, release delay, minimum volume, termination fees. Add them in dollars.
Count days paid early
Normal pay date minus the day the cash reaches you. Use the real day, not the advertised one.
Compute cost per day and annualised
Total charges ÷ cash received × 365 ÷ days early.
Add the risks
Does the factor have recourse if the broker never pays? What happens on a short pay, a chargeback or a dispute? Who carries the cost?
Choose by use, not by headline
Quick pay for one broker you trust and one cash week. A factor for steady need. Direct billing when the cash gap is small.
Side by side
| Question | Factoring | Broker quick pay |
|---|---|---|
| Who pays you early | A third-party factor | The broker itself |
| How the cost shows up | Fee on invoice, plus other charges in the contract | A discount on that invoice |
| Scope | Often a set of customers or all invoices | Per broker, per invoice |
| Who bears the risk of non-payment | Depends on recourse terms in the contract | The broker’s own risk; you are paid and done |
| Short pays and disputes | May come back as a chargeback to you | Broker settles the rate; ask how it treats disputes |
| Paperwork | Notice of assignment; invoices go through the factor | Usual invoice, plus a quick pay form |
| Flexibility | Contract terms, minimums, notice periods | Use it when you need it |
Structure only. Terms vary by contract and are not sourced from a provider’s public page. Read yours. verify
Worked example EXAMPLE VALUES
Invented numbers. Invoice $3,000, normal pay on day 30.
- Quick pay 3%: fee $90.00, cash $2910.00 on day 5, 25 days early. $90.00 ÷ $2910.00 × 365 ÷ 25 = 45.2% a year.
- Factor 2.5%: fee $75.00, cash $2925.00 on day 1, 29 days early. $75.00 ÷ $2925.00 × 365 ÷ 29 = 32.3% a year.
- Credit line at 12% a year: about $29.59 for 30 days.
The cheapest per day is not always available. A credit line needs approval, a factor needs a contract and quick pay needs a broker who offers it.
Comparison sheet to copy
Fill the sheet for one real invoice per option. Add the other charges before the percent.
What we would check in your audit
- Your actual days from invoice to deposit by broker, so the days early number is real.
- Fees on your current statements, added in dollars and annualised.
- Chargebacks or short pays that came back through a factor.
- Brokers where quick pay would cost less than your current option.
Add up the real cost of getting paid early on your last 20 loads
Questions
Is there a standard factoring fee?
We state none. Terms differ by provider and volume. Compare on your own contract.
Does quick pay change the rate con?
Sometimes. Read the quick pay terms and any change to detention or accessorial treatment. verify
Is this financial advice?
No. It is arithmetic on invented numbers. A lender or accountant should check your case.
Which is better for a 10 truck fleet?
Neither by default. The better option is the one with the lowest total cost on your invoices and the risks you can accept.
Related: factoring vs direct billing, factoring cost tool, short pay and chargebacks, 13-week cash view, cash flow simulator, invoice aging.
See what your last 20 loads show.
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