Invoice Factoring Calculator
What a 3% fee actually costs as an annual rate.
Calculate invoice factoring cost: advance, reserve, fees and the effective APR on the money you actually received, to compare against a credit line.
The share paid up front. The rest is held as a reserve until your customer settles.
Commonly 30, sometimes 15. Shorter periods make late payment much more expensive.
Effective APR
42.9%
on the $8500.00 you actually received
The APR is measured against the advance, not the invoice, because the advance is the capital you had the use of. Compare it with a credit line before deciding: factoring is expensive money, which is sometimes still the right money.
How the Invoice Factoring Calculator works
Factoring is quoted as a small percentage for a short period, which is exactly why it is hard to compare with anything else. Three percent for thirty days is not a 3% cost of money: you only received the advance, not the whole invoice, and you only had it for a month. Annualised on that basis the same deal is somewhere above 40%, which is the number to hold against a credit line.
Also known as: receivables factoring calculator · invoice discounting calculator · AR factoring calculator
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How is invoice factoring cost calculated?
A fee, usually a percentage of the invoice per 30-day period, charged until the customer settles. You receive an advance of perhaps 80-90% immediately, and the remaining reserve, less the fees, when payment lands.
What is the effective APR of factoring?
The fee divided by the advance, annualised over the days outstanding. A 3% fee on a 30-day invoice at an 85% advance is roughly 43% a year, because the fee is measured against the 85% you actually got rather than the full invoice.
Why does paying on day 31 cost so much more?
Most agreements charge whole periods rather than pro rata, so a single day past the boundary triggers a second full period and can nearly double the fee. Check whether yours prorates, because on slow-paying debtors that clause is the whole cost.
Is factoring worth it?
It is expensive money, and sometimes the right money. If the cash unlocks a purchase order you could not otherwise fund, the return on that order is what it should be judged against, not the APR in isolation. If it is covering a permanent working-capital gap, a credit line is almost always cheaper.