Calculate percentage fees on gross revenue, avoid double counting, and distinguish the economic cost of a load from the timing of invoice cash.
A dispatch fee or factoring fee stated as a percentage is normally calculated by multiplying the applicable gross revenue by the agreed percentage. If dispatch is 5% and factoring is 2.5% on the same $2,400 invoice base, the modeled fees are $120 and $60, for a combined $180. The carrier retains $2,220 before operating costs and any other deductions.
These fees affect more than the final profit line. Because they rise with gross revenue, the gross rate needed to cover a fixed operating cost must be calculated by dividing the required retained amount by the percentage of revenue left after fees. Contract terms still control which revenue is included, when the charge is earned, and what other conditions apply.
What each fee pays for—and what it does not prove
Dispatch service and invoice factoring solve different business problems. Dispatch support may include searching for freight, communicating with brokers or shippers, organizing documents, or other agreed back-office tasks. Factoring generally changes when a carrier receives cash on an eligible receivable, subject to the factor agreement. The names alone do not define the exact service, price base, recourse, reserve, or contract obligation.
A fee can be economically worthwhile and still reduce load profit. Evaluate the dollars removed, the work or timing gained, and alternatives available to the business. Torz Freight calculators measure the entered fee; they do not endorse a provider, interpret an agreement, decide credit approval, or determine whether an invoice is eligible.
| Question | Dispatch agreement | Factoring agreement |
|---|---|---|
| Percentage base | Which booked or collected revenue? | Which purchased invoice amount? |
| Timing | When is the service fee earned? | When is an advance or payment released? |
| Excluded items | Are reimbursements or accessorials included? | Are fees, reserves, or ineligible charges withheld? |
| Risk and remedies | Cancellation and service terms | Recourse, disputes, chargebacks, and reserves |
Calculate individual and combined percentage fees
Convert each entered percent to a decimal and multiply it by the applicable gross amount. If both percentages apply to the same base, their dollar effects can be added. Do not assume every agreement uses the same base: an accessorial, reimbursement, fuel surcharge, or other line item may be treated differently under a specific contract.
When two fees are each calculated directly on the same gross revenue, 5% plus 2.5% means a combined 7.5% of that gross amount. This is not compounding. If one contractual fee is instead calculated after another deduction, model the agreement’s actual sequence rather than forcing it into a simple combined-percentage tool.
Fee dollars = applicable gross revenue × (fee percentage ÷ 100)Worked example: from gross offer to modeled load profit
Consider a hypothetical $2,400 gross load. Dispatch is entered at 5% and factoring at 2.5%, both applied to the full gross amount. The load requires 760 loaded miles and 90 deadhead miles, or 850 total miles. The business enters an operating cost of $1.55 per mile.
Dispatch is $2,400 × 0.05 = $120. Factoring is $2,400 × 0.025 = $60. Operating cost is 850 × $1.55 = $1,317.50. Estimated load profit after those modeled items is $2,400 − $120 − $60 − $1,317.50 = $902.50. That figure is not owner take-home pay and does not include any unentered toll, tax, direct expense, or other business cost.
| Item | Calculation | Amount |
|---|---|---|
| Gross revenue | Entered offer | $2,400.00 |
| Dispatch fee | $2,400 × 5% | $120.00 |
| Factoring fee | $2,400 × 2.5% | $60.00 |
| Operating cost | 850 × $1.55 | $1,317.50 |
| Modeled profit | $2,400 − $180 − $1,317.50 | $902.50 |
How fees change break-even and target RPM
Suppose operating cost is $1.55 per all mile and combined revenue fees are 7.5%. The carrier retains 92.5% of gross revenue. Gross break-even RPM is therefore $1.55 ÷ 0.925, or about $1.68. Simply adding 7.5 cents to $1.55 would be wrong because the fees are a percentage of gross dollars, not a fixed per-mile charge.
For a target that leaves $0.35 per mile above modeled operating cost, add cost and target first: $1.55 + $0.35 = $1.90 retained per mile. Divide by 0.925 to get a gross target of about $2.05 per mile. Compare that target with true RPM across loaded, deadhead, and relevant repositioning miles.
Gross target RPM = (operating CPM + desired profit per mile) ÷ (1 − combined fee percentage ÷ 100)Factoring changes cash timing, not the meaning of revenue
A booked load, completed load, issued invoice, receivable, factor advance, and final settlement are different events. Factoring may provide earlier cash under an agreement, but it does not create additional freight revenue. A reserve or withheld amount is also not automatically a permanent expense; treatment depends on whether and when it is released.
Keep economic performance and cash movement visible separately. Record the earned revenue and operating cost needed to judge the load, then record invoice and payment activity so the business can see what was billed, what cash arrived, what remains outstanding, and what fees were actually charged.
Common fee-modeling mistakes
- Entering 0.05 when a calculator asks for 5 percent, or entering 5 when it expects a decimal.
- Applying a fee to loaded miles even though the agreement applies it to gross invoice dollars.
- Counting dispatch or factoring inside operating CPM and subtracting it again as a revenue percentage.
- Assuming accessorials and reimbursements use the same percentage base without reading the agreement.
- Calling an early cash advance new revenue or treating an unreleased reserve as permanently lost without support.
- Evaluating fee dollars without considering service scope, payment timing, recourse, disputes, or cancellation terms.
Related Torz Freight tools
Frequently asked questions
Should dispatch and factoring be added to cost per mile?
When the contracts charge a percentage of gross revenue, Torz Freight keeps them as revenue-based fees and adjusts break-even or load profit separately. Converting them to a fixed CPM can misstate the effect when rates change.
Does factoring make a load more profitable?
Factoring can change cash timing, but its fee generally reduces the amount retained from an eligible invoice. Profitability and liquidity are related but different questions.
Can the two percentages always be combined?
Only when they apply to the same gross base in the same way. If contract bases or calculation sequences differ, calculate each according to its terms.