Skip to content
BSG Carriers
800-799-3080Carrier LoginGet started
Cash flow

Factoring vs quick pay: which actually costs you less

Both trade a slice of the invoice for getting paid sooner. Which is cheaper depends on how often you use it, and on terms people rarely read.

An overhead view of tractors and trailers in a freight yard

Getting paidBy BSG Carriers·Published ·3 min read

Two ways to not wait thirty days

Standard broker payment terms are commonly around thirty days, sometimes more. A truck with a payment due on the first cannot always wait, and that gap is what both factoring and quick-pay exist to close.

Quick-pay is offered by the broker: they pay you in a few days instead of thirty, and keep a percentage for doing it. Factoring is a third party: a factoring company buys the invoice, pays you most of it immediately, collects from the broker later, and keeps a fee.

They solve the same problem and are priced differently, and the cheaper one depends far more on how you use it than on the headline rate.

How they differ in practice

Quick pay: per load, no commitment

Decide load by load. No contract, no minimum. Only available from brokers who offer it, and the rate varies between them.

Factoring: a relationship

Usually a contract, often with monthly minimums. Works with any broker, and most factors also run credit checks on them for you.

Recourse vs non-recourse

Recourse factoring means you repay the advance if the broker never pays. Non-recourse costs more and moves some of that risk. Read which one you are signing.

Speed

Both are quick. Quick-pay is typically a few days; factoring is often same or next day once the paperwork is clean.

Working out which is cheaper for you

Compare them as a percentage of the invoice over a month, not per load. If you only need fast cash on a few loads, quick-pay is usually cheaper because you pay for it only when you use it. If you need every invoice paid quickly, factoring often prices better per invoice and saves you the collections work.

Then look past the headline rate. Factoring agreements can carry monthly minimums, wire fees, per-invoice fees, early termination clauses and reserve holdbacks. A 2% rate with fees attached can end up costing more than a 3% rate without them, and the comparison people make on the first number is often the wrong one.

The other real value of a factor is credit-checking. Being told a broker is a poor credit risk before you haul for them is worth something on its own, whatever the rate.

When neither is worth it

This is a cash-flow product, and cash-flow products are expensive by nature.

  • If you can carry thirty days comfortably, waiting costs nothing and is the cheapest option there is.
  • A percentage of every invoice is a permanent reduction in margin. Treat it as a cost of doing business, not as free money.
  • Building a reserve so you can stop factoring is usually worth more over a year than negotiating the rate down by a fraction.
  • If you are factoring purely because a broker pays slowly, the cheaper fix may be a different broker.

Where a dispatcher fits

BSG does not pay you and is not a factor. Brokers pay you directly, and whatever factoring arrangement you have stays exactly as it is.

What we do is assemble the invoice packet — rate confirmation, signed BOL, lumper and detention receipts — in the format your factor wants, because a packet that comes back for corrections delays the money as surely as slow terms do.

FAQ

Common questions

It depends entirely on your reserve. If a thirty-day wait means missing a truck payment, then yes, and the fee is the price of staying operational. If you can cover the gap, factoring is a permanent cut of your margin for a problem you do not have.
More

Other articles

Owner-operator basics4 min read

How to find loads as an owner-operator

There are five ways to keep a truck loaded, and they suit different operations. This walks through all of them, including the ones that mean not hiring us.

Read it

Want this handled rather than explained?

Tell us about your truck and the lanes you run, and we will tell you honestly whether a dispatcher is worth it for you.