Invoice Factoring Calculator
Estimate Your Cash Advance and Fees
Use this free Invoice Factoring Calculator to estimate your immediate cash advance, factoring fees, and net funds received. Perfect for businesses needing fast working capital to manage cash flow while waiting for customers to pay.
This calculator estimates your upfront cash from factoring and the total cost based on the advance rate, factoring fee, and the time until your customer pays the invoice.
Advance = Invoice Amount × Advance Rate
Fee = Invoice Amount × (Factoring Fee per 30 days × (Days Outstanding ÷ 30))
Net Funds = Advance - Fee
Invoice factoring is a financing method where a business sells its unpaid invoices to a third party for immediate cash. You typically receive 70% to 90% of the value upfront, with the remaining balance (minus fees) paid once your customer settles the invoice.
Types of Factoring:
- • Recourse Factoring
- • Non-Recourse Factoring
- • Spot Factoring
- • Full Ledger Factoring
Pros
- • Immediate cash flow
- • No collateral needed
- • Scales with revenue
- • Easy approval
Cons
- • Can be expensive
- • May impact customer relationships
- • Fees increase with longer payment cycles
- • May signal cash flow issues to lenders
Input Parameters:
- Invoice Amount: $50,000
- Advance Rate: 85%
- Factoring Fee: 2.5%
- Payment in: 45 days
Results:
- Cash Advance: $42,500
- Total Fee: $1,875
- Net Funds: $40,625
- Effective APR: 18.75%
How is invoice factoring cost calculated?
Factoring costs are calculated as a percentage of the invoice amount, typically 1-5% per 30-day period. The total cost depends on the advance rate, factoring fee, and how long it takes for your customer to pay.
What is a good advance rate for invoice factoring?
Good advance rates typically range from 80% to 90%. Higher rates may be available for businesses with strong customers and good credit history.
How much does factoring typically cost?
Factoring typically costs 1-5% of the invoice value per 30-day period. Annual effective rates often range from 10-40% depending on the terms and payment cycles.
Is invoice factoring the same as invoice financing?
They're similar but not identical. Factoring involves selling invoices, while invoice financing uses invoices as collateral for a loan. Factoring typically provides faster access to cash but may be more expensive.
Does invoice factoring affect my credit score?
Invoice factoring generally doesn't affect your credit score directly since it's not reported to credit bureaus. However, the improved cash flow can help you pay other bills on time, indirectly benefiting your credit.