Invoice Factoring Calculator
Invoice Factoring Cost Calculator — Estimate Your True Cost
Use this calculator to model your factoring cost before signing with any factor. Enter your numbers to see net payout, reserve balance, factoring fee in dollars, and effective APR.
Calculator
How to Read Your Results
Immediate advance: The cash you receive when you submit the invoice — before your customer pays. This is the advance rate × invoice face value.
Reserve held: The portion the factor holds until your customer pays (100% − advance rate). Returned to you (minus the fee) when the customer pays.
Factoring fee: What the factor charges for advancing cash. Fees are typically quoted per 30-day period — but if your customer pays in 45 days, you pay 1.5× the base fee. If they pay in 60 days, 2×.
Effective APR: The annualised cost of the factoring arrangement. This is the metric that makes different factoring quotes comparable. A 2%/30-day fee with 30-day payment = approximately 24% APR. A 2%/30-day fee with 60-day payment = approximately 12% APR.
Net total received: Advance + reserve − fee. This is your take-home on the invoice after factoring costs.
Example Calculations
Example 1 — Standard B2B Invoice, 30-Day Payment
| Input | Value |
|---|---|
| Invoice value | $50,000 |
| Advance rate | 90% |
| Fee rate | 2% per 30 days |
| Customer payment | 30 days |
| Output | Value |
|---|---|
| Immediate advance | $45,000 |
| Reserve held | $5,000 |
| Fee charged | $1,000 (2% × $50,000) |
| Net on reserve release | $4,000 |
| Total received | $49,000 |
| Cost as % of invoice | 2% |
| Effective APR | ~24% |
Example 2 — Same Invoice, 60-Day Payment
| Input | Value |
|---|---|
| Invoice value | $50,000 |
| Advance rate | 90% |
| Fee rate | 2% per 30 days |
| Customer payment | 60 days |
| Output | Value |
|---|---|
| Immediate advance | $45,000 |
| Reserve held | $5,000 |
| Fee charged | $2,000 (2 periods × 2% × $50,000) |
| Net on reserve release | $3,000 |
| Total received | $48,000 |
| Cost as % of invoice | 4% |
| Effective APR | ~24% (same rate, same period cost, longer time) |
Key insight: The effective APR is the same in both examples — 24% — but the total dollar cost doubled because the invoice took twice as long to collect. This is why asking your factor for the per-period rate is not enough: you must model your expected payment timeline.
Example 3 — Freight Invoice, Same-Day Fuel Advance
| Input | Value |
|---|---|
| Load invoice value | $3,000 |
| Fuel advance (at dispatch) | 50% = $1,500 |
| Final advance rate | 97% total |
| Fee rate | 1.5% per 30 days |
| Broker payment | 30 days |
| Output | Value |
|---|---|
| Fuel advance at dispatch | $1,500 |
| Remaining advance at delivery | $1,410 ($2,910 total − $1,500 already paid) |
| Reserve held | $90 (3%) |
| Fee charged | $45 (1.5% × $3,000) |
| Net on reserve release | $45 |
| Total received | $2,955 |
| Cost as % of load | 1.5% |
Common Fee Structures — Comparison Table
| Fee Structure | Effective APR at 30-day payment | Effective APR at 60-day payment |
|---|---|---|
| 0.69% per 30 days | ~8.3% | ~8.3% |
| 1.0% per 30 days | ~12% | ~12% |
| 1.5% per 30 days | ~18% | ~18% |
| 2.0% per 30 days | ~24% | ~24% |
| 3.0% per 30 days | ~36% | ~36% |
| 0.5% per week | ~26% | ~26% |
| 1.0% per week | ~52% | ~52% |
| 1.5% per week | ~78% | ~78% |
Note: Effective APR does not change with payment speed — it is a rate per unit time. What changes is the total dollar cost. A longer payment period means more periods of fees, but the same annualised rate.
What This Calculator Does Not Include
Real-world factoring costs include fees beyond the base factoring fee. Always request a full fee schedule from your factor:
- Wire transfer fee: $15–$35 per advance (some factors charge per wire, others waive this)
- Monthly administration fee: $50–$150 at some factors (charged even in months you factor less than the minimum)
- Due diligence / onboarding fee: $200–$500 one-time, charged at account setup
- Minimum volume fee: If your monthly factoring volume falls below the contract minimum, some factors charge a shortfall fee
- Early termination fee: 1–3% of contracted monthly volume × remaining months if you exit a long-term contract early
Add these to your modelled cost for a complete picture.
Frequently Asked Questions
Why does the effective APR look so high compared to a bank loan? Factoring fees, when converted to an annualised rate, often appear high (24–60% effective APR) because factoring serves a different risk profile than bank financing. The comparison that matters is not factoring vs. a bank loan (you likely cannot access a bank loan on the same terms and timeline) but factoring vs. the next best available alternative. If your alternative is an MCA at 100–200% effective APR, factoring at 24% APR is favourable.
Should I factor every invoice or just some? This depends on your cash flow needs and contract terms. Under a contract factoring arrangement, you may be required to factor all invoices from your customers (or all invoices above a minimum). Under spot factoring, you choose which invoices to submit. Selective factoring — submitting only slow-paying customers — often conflicts with contract factoring terms, so confirm your agreement’s requirements.
How do I compare two different factoring quotes? Convert both to effective APR (cost ÷ advance amount ÷ payment days × 365 × 100) and model at your expected payment speed. Also request a full fee schedule from each factor, as wire fees, monthly admin fees, and minimum volume fees can make a lower base rate more expensive overall.
What advance rate should I expect? Advance rates vary by industry and customer credit:
- Freight: 90–97% (strong broker credit)
- Staffing: 85–92%
- General B2B: 80–92%
- Healthcare: 70–85%
- Construction: 70–85% Your factor will provide advance rates for your specific customer list after running their credit.
Is there a minimum invoice size for factoring? Most traditional factors have a minimum invoice size of $1,000–$5,000 per invoice, and monthly volume minimums of $10,000–$50,000. Spot factoring providers (Riviera Finance, Paragon Financial Group) may work with smaller volumes. Very small invoices (under $500) are generally not economic to factor due to the per-transaction processing cost.