Invoice Factoring Cost Calculator — True Cost and APR of a Factoring Offer

What does that factoring offer really cost?

Enter an invoice, how long your customer takes to pay, and one or more factoring offers. You get the cost in dollars, as a share of the invoice and as an annual rate on the cash advanced, the rebate you get back, and what each offer costs over a year at your invoice volume. A "3% fee" that is charged every 30 days and a customer who pays in 38 days is a very different number.

Calculated in this browser tab. No account, no upload. The example is made up. A planning estimate, not an offer.

1. Your invoice and the offers

Invoice amount ($)

Days your customer takes to pay

Invoices factored per month

Line of credit rate for comparison (% a year, optional)

One offer per line: name, advance %, fee % per period, period days, flat fee per invoice, stepped or daily. Stepped charges a whole period for any part of one; daily prorates.

Offers

Enter an invoice and your offers, or load the example, then click Calculate the cost.

The arithmetic, and what it leaves out

The advance is the invoice times the advance rate. The rest is the reserve.
The factor fee is the invoice times the fee rate, once per fee period (rounded up to a whole period when stepped, prorated by day when daily), plus any flat fee per invoice.
The rebate is the reserve minus all fees. If fees exceed the reserve it goes negative and you owe the difference.
The annual rate is simple, not compounded: cost divided by the cash advanced, scaled to 365 days.
Not modelled: setup, termination and monthly minimum fees, fees on disputed invoices, recourse and chargeback terms, credit-check fees and taxes. Ask the factor for the full fee schedule.

Common questions

What is the real cost of invoice factoring?

Add the factor's fee for every fee period your customer takes to pay, plus flat fees such as ACH or wire charges, and compare that to the cash you were advanced. A 3% fee per 30 days on a 90% advance paid in 38 days is two periods, 6% of the invoice, which is about 38% a year on the cash advanced.

Why does paying one day late cost so much?

Many factors charge a whole fee period at a time. If the period is 30 days and your customer pays on day 31, you pay a second full period. Daily accrual avoids that cliff.

What is the reserve and rebate?

The factor holds back the part of the invoice it did not advance. When the customer pays, the factor takes its fees out of that reserve and rebates the remainder to you.

Is factoring cheaper than a line of credit?

Usually not on rate, but it can be easier to get and scales with sales. Enter a line-of-credit rate to see the cost of borrowing the same advance for the same days.

Which fees does this leave out?

Setup, termination and monthly minimum fees, fees on disputed or charged-back invoices, credit check fees and recourse terms. Add recurring per-invoice items to the flat fee.

Is my data uploaded?

No. Everything runs in your browser tab and nothing is sent anywhere. There are no accounts.

Is this financial advice?

No. It is a planning estimate from numbers you enter. Read the factoring agreement and its full fee schedule before signing.