Factoring vs Quick Pay: Which Is Better for Your Cash Flow?

Two Ways to Get Paid Faster

Waiting 30 to 60 days for brokers to pay your invoices is one of the biggest cash flow challenges in trucking. ¹ Two solutions dominate the market: freight factoring and broker quick pay. Both get you paid faster. They work differently and cost differently.

This guide puts them side by side with real numbers so you can determine which works better for your operation, or whether using both makes the most sense.

For a complete overview of how factoring works, see our freight factoring guide. To compare factoring company rates and terms, visit our factoring comparison page.

How Each Works

Freight Factoring

You sell your invoices to a third-party factoring company that advances you 90-97% of the invoice value within 24 hours. The factoring company collects payment from the broker on normal terms. After the broker pays, you receive the remaining reserve minus the factoring fee.

Key components:

• Advance rate: 90-97% paid upfront
• Factoring rate: 1-5% per invoice ³
• Reserve: 3-10% held until broker pays
• Contract: month-to-month or longer term
• Works with any broker regardless of quick pay availability

Broker Quick Pay

The broker pays you faster than standard terms in exchange for a fee deducted from your payment. No third party is involved. The transaction stays between you and the broker.

Key components:

• Payment: full invoice minus quick pay fee
• Fee: 1-5% depending on broker and speed ²
• No contract or commitment
• Only available from brokers that offer it
• Per-load decision with no obligations

Cost Comparison with Real Numbers

Let's compare the monthly cost for a carrier generating $60,000 in invoices across 20 loads per month.

Scenario 1: All Factoring

• 20 invoices averaging $3,000 each
• Factoring rate: 2.5% (flat rate)
• Advance rate: 95%
• Monthly factoring cost: $60,000 x 2.5% = $1,500/month
• Cash received immediately: $57,000 (95% advance)
• Reserve returned after broker payment: $1,500 ($3,000 - $1,500 fee)

Scenario 2: All Quick Pay

• Same 20 invoices averaging $3,000
• Quick pay rate: 3% average across brokers
• Monthly quick pay cost: $60,000 x 3% = $1,800/month
• Cash received in 2-5 days: $58,200

Scenario 3: Hybrid Approach

• 12 invoices factored (brokers without quick pay): $36,000 x 2.5% = $900
• 8 invoices quick pay (brokers with 2% quick pay): $24,000 x 2% = $480
• Monthly total cost: $1,380/month

The hybrid approach saves $120/month over pure factoring and $420/month over pure quick pay in this example. Use our factoring cost calculator to model your actual numbers.

Side-by-Side Comparison

Feature	Factoring	Quick Pay
Payment speed	Same-day to next-day	1-7 days depending on broker
Cost per invoice	1-5%	1-5%
Contract required	Usually yes	No
Works with all brokers	Yes	Only brokers that offer it
Broker credit checks	Yes (protects you)	No
Reserve holdback	Yes (3-10%)	No
Fuel card discounts	Often included	No
Setup process	Application, 1-3 days	None
Monthly minimums	Sometimes	Never

When Factoring Wins

High volume. The more invoices you factor, the lower your per-invoice rate tends to be. Volume discounts are common and can bring rates below 2%.

Working with small brokers. Factoring works with any broker, not just those offering quick pay. If you haul for smaller or less-established brokers, factoring is your only fast-payment option.

Broker credit protection. Factoring companies check broker credit before purchasing invoices. This alerts you to brokers who may not pay. With non-recourse factoring, you are protected if a broker goes bankrupt.

Additional services. Most trucking-specific factoring companies include fuel card discounts, back-office support, and collections management. The value of the fuel discount alone can offset a meaningful portion of the factoring cost.

When Quick Pay Wins

Low or inconsistent volume. If you only need fast payment on a handful of loads per month, quick pay avoids factoring contracts and monthly minimums.

Working exclusively with major brokers. Large brokers often offer competitive quick pay rates. If all your loads come from brokers with quick pay, the per-load flexibility is valuable.

Simplicity. No application, no contract, no third party. You decide on a per-load basis whether the fee is worth faster payment.

Broker relationship. Some carriers prefer keeping the payment relationship direct with their brokers rather than introducing a factoring company.

Decision Framework

Answer these questions to determine which option fits your operation:

How many invoices do you generate per month?

• Under 10: Quick pay is usually sufficient
• 10-30: Either option works; compare total monthly costs
• Over 30: Factoring volume discounts usually make it cheaper

Do all your brokers offer quick pay?

• Yes: Quick pay may be all you need
• No: You need factoring for brokers without quick pay, or a hybrid approach

How important is same-day payment?

• Critical: Factoring typically offers faster funding
• 2-5 days is fine: Quick pay works

Do you want broker credit protection?

• Yes: Factoring provides this; quick pay does not
• Not concerned: Quick pay is simpler

Do you value fuel card discounts?

• Yes: Many factoring companies include competitive fuel card programs
• No: Quick pay keeps things simple

The Hybrid Strategy

Many experienced carriers use both tools strategically:

1. Maintain a factoring relationship for brokers without quick pay and for invoices where the factoring rate beats the quick pay fee
2. Use quick pay when the broker's rate is lower than your factoring rate
3. Factor invoices from brokers you want credit-checked
4. Use quick pay for trusted brokers with established payment history

This approach requires checking your factoring contract for exclusivity clauses. Some agreements require you to factor all invoices from certain brokers or all invoices above a certain dollar amount. Negotiate flexibility into your factoring contract if you plan to use a hybrid approach.