Calculate factoring costs, see your advance amount, and compare the effective APR to a standard business loan. Adjust your invoice volume, advance rate, and discount fee to model different scenarios.
How long your customers typically take to pay
85% of $100,000 in monthly invoices
| Monthly invoice value | $100,000 |
| Advance rate | 85% |
| Cash advanced upfront | $85,000 |
| Holdback (15%) | $15,000 |
| Discount fee per month (2%) | $2,000.00 |
| Annual factoring cost | $24,000 |
| Effective APR | 28.6% |
You issue a $100,000 invoice to your customer with 30-day payment terms.
The funder advances $85,000 (85%) to your account within 24-48 hours.
Customer pays after ~30 days. You receive the $15,000 holdback minus the $2,000.00 fee.
Switch between 30, 60, and 90-day terms to see how slower-paying customers increase your effective APR. Longer terms mean your capital is tied up longer for the same fee.
Adjust the advance rate to see how much upfront cash you actually receive. A higher advance rate means more working capital but the same discount fee, so your effective APR drops.
Even a 0.5% reduction in the discount fee can save thousands annually. Use the calculator to quantify the saving and take it to your provider.
Slide the monthly invoice value up to see how costs scale. The effective APR stays the same, but the dollar cost grows linearly with volume.
Compare invoice finance, lines of credit, and business loans from 50+ lenders.
Subject to lender approval, terms and conditions apply.
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You sell outstanding invoices to a finance provider who advances 80-95% of the invoice value upfront. The funder collects payment from your customer, then releases the remaining balance minus their fee. It converts receivables into immediate working capital.
Factoring means the funder collects payment directly from your customers (disclosed facility). Invoice discounting means you continue to collect payments yourself (confidential facility). Discounting preserves your customer relationships but typically requires stronger credit controls.
Discount fees typically range from 1-3% per invoice. The effective APR depends on how quickly your customers pay. For example, 30-day payment terms at a 2% discount fee works out to roughly 28% APR. That is expensive compared to a term loan, but it buys cash flow certainty and avoids taking on long-term debt.
Invoice finance is typically used by businesses with $500K to $50M in annual revenue that trade on 30-90 day payment terms with other businesses (B2B). It is not suitable for B2C or cash-based businesses because there are no invoices to factor.
Selective factoring lets you choose which invoices to fund, giving you flexibility to factor only when you need cash flow. Whole-ledger factoring requires you to factor all invoices. Selective is more flexible but often comes with higher per-invoice fees.
Factoring (disclosed) may affect relationships because the funder contacts your customers to collect payment. Invoice discounting (confidential) does not affect relationships because you continue to manage collections yourself. Most providers offer both options.
Results are estimates only and should not be relied upon for financial decisions. Actual invoice finance repayments will depend on the lender, your credit profile, and the specific terms offered. Interest rates used are for illustration purposes only and may not reflect current market rates.
Subject to lender approval, terms and conditions apply.
This calculator is general information only and is not financial advice.