---
title: "Factoring fee"
url: https://carrierkyc.com/glossary/factoring-fee
description: "The factoring fee, or discount, is what a factor charges to buy an invoice, usually a percentage of face value that can rise the longer the invoice stays unpaid."
---

# Factoring fee

**Definition:** The factoring fee, or discount, is what a factor charges to buy an invoice, usually a percentage of face value that can rise the longer the invoice stays unpaid.

Also called: Discount fee, Discount rate, Factoring rate. Category: Factoring.

Fee structures vary. A flat fee charges one percentage regardless of when the debtor pays. A tiered fee starts at a base rate for a first period, often 30 days, and adds an increment for each period after that. Many contracts add per-transaction charges for ACH or wire transfers, fuel advances, credit checks or monthly minimums.

Headline rates hide the real cost. A 3% fee on an invoice paid in 30 days works out to about 36.5% on a simple annualized basis (3% x 365 / 30), before any add-on fees. Carriers comparing offers should compare net cash and effective annual cost, which the [factoring cost calculator](https://carrierkyc.com/tools/factoring-cost-calculator) shows.

For the factor, the fee has to cover cost of funds, debtor credit risk, fraud losses and the labor of verification. Pricing a recourse deal on a slow debtor the same as one on a fast debtor quietly gives margin away.

> **Caution: Common mistakes** Quoting a low base rate and recovering it through fees the carrier only notices later. That shows up as disputes, early terminations and complaints, which cost more than the fee brought in. See [freight factoring rates](https://carrierkyc.com/guides/freight-factoring-rates) for how carriers compare offers.

## Related

- [Freight factoring rates in 2026: what carriers pay and the real APR](https://carrierkyc.com/guides/freight-factoring-rates)
- [Factoring cost & APR calculator](https://carrierkyc.com/tools/factoring-cost-calculator)
- [Advance rate](https://carrierkyc.com/glossary/advance-rate)
- [Days-to-pay](https://carrierkyc.com/glossary/days-to-pay)
- [Termination fee](https://carrierkyc.com/glossary/termination-fee)