Invoice Factoring Calculator
Factoring turns an unpaid invoice into cash now. The factor advances most of the invoice, holds the rest in reserve, and pays the reserve minus its fee once your customer pays. Enter the terms to see what you receive and what it costs.
Enter your figures below. Results update as you type.
Cash advanced now$42,500.00
- Advance 85%
- Reserve paid later 11%
- Factoring fee 4%
- Factoring fee
- $1,875.00
- Reserve released when the customer pays
- $5,625.00
- Total you receive
- $48,125.00
- Fee as a share of the invoice
- 3.75%
- Equivalent APR on the cash advanced
- 35.8%
This prorates the fee by the day. Some factors charge in steps, such as a full 30-day fee as soon as a new period begins, which costs more.
How the Invoice Factoring calculation works
Advance = invoice x advance rate; fee = invoice x fee % x days / 30
On a $50,000 invoice with an 85% advance, you receive $42,500 up front. At 2.5% per 30 days and 45 days to payment, the fee is $1,875, so you collect $48,125 in total. Measured against the cash advanced, that is about 35.8% a year.
Frequently asked questions
How is a factoring fee calculated?
As a percentage of the invoice for each period it is outstanding. At 2.5% per 30 days, a $50,000 invoice paid after 45 days costs $1,875.
What is an advance rate in factoring?
The share of the invoice paid to you immediately, typically 70% to 95%. The remainder is held as a reserve and released, less the fee, when your customer pays.
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