Free Business Tool

Invoice Factoring Calculator

See how much cash you'll get, what the factor charges, and your net from selling invoices.

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What Is the Invoice Factoring Calculator?

Invoice factoring turns your unpaid invoices into immediate cash. You sell them to a factoring company at a discount, they advance 80-95% of the invoice value, and they collect directly from your customer. When the customer pays, the factor sends you the rest minus their fee. This calculator shows what you'll get upfront, what the fee costs, your net proceeds, and the annualized rate. Here's the key distinction: factoring isn't a loan. It's a sale of an asset. That means no debt on your balance sheet, and the factor cares about your customer's credit, not yours. The catch? A 2% monthly factor fee sounds small until you annualize it -- that's 24%+ before additional fees get stacked on.

How to Use This Calculator

Enter the Invoice Amount

The total face value of the invoice(s) you want to sell. You can factor single invoices or submit them in batches.

Set the Advance Rate

The percentage the factor pays you upfront. Standard is 80-90% for most business invoices. Government invoices often qualify for 90-95%.

Input the Factor Fee

What the factor charges per 30-day period. Rates run 1-5% per month depending on your customer's credit, the invoice size, and your industry.

Estimate Days to Payment

How long your customer typically takes to pay. This drives the total fee -- most factors charge per 30-day period or fraction thereof.

Key Concepts

Advance Rate vs. Factor Fee

Advance rate = how much cash you get now. Factor fee = what it costs. A 90% advance with a 3% fee costs more than an 80% advance with a 1% fee. Don't chase the highest advance without checking the fee.

Recourse vs. Non-Recourse

Recourse: if your customer doesn't pay, you owe the factor. Non-recourse: the factor eats the loss. Non-recourse costs more because they're taking the credit risk off your plate.

Reserve Holdback

The gap between invoice value and advance (e.g., 15% on an 85% advance) gets released to you when the customer pays, minus the fee. It protects the factor against short payments or disputes.

Customer Notification

Most factoring setups require telling your customers to send payment to the factor. That can be awkward. Confidential factoring hides it from your clients but costs more.

Expert Insights

Factoring makes the most sense when your customers are solid but slow -- net-60 or net-90 payers -- and you need cash now. The cost is worth it when it lets you accept bigger orders or keeps the lights on during revenue gaps.

Always annualize the fee. A "low" 1.5% monthly factor fee is 18%+ annualized. Compare that to a business credit line at 10-15% before you commit to factoring long-term.

If you're factoring $100K+/month consistently, push for volume discounts -- most factors will cut the fee 0.25-0.5%. You might also get lower rates on longer contracts, but don't lock in beyond 12 months until you've tested the relationship.

Frequently Asked Questions

No. You're selling an asset (your invoice), not borrowing money. Nothing hits your balance sheet as debt, and there are no fixed monthly payments. The factor collects from your customer directly.

With recourse factoring, you pay the advance back. With non-recourse, the factor takes the hit (and charges you more for it). Most small business deals are recourse by default -- you have to specifically negotiate non-recourse.

Most industries can use factoring, but the smart move is finding a factor that specializes in yours. Trucking, staffing, manufacturing, government contracting, and healthcare each have dedicated factors with better rates and smoother processes.

Usually 24-48 hours after you submit and get approved. First-time setup takes 3-7 days while the factor checks out your customers. After that, subsequent invoices fund fast.

With standard factoring, yes -- your customers are told to pay the factor instead of you. Confidential factoring keeps it hidden but costs 0.5-1% more per month. Depends on how much you care about that client perception.

This calculator provides estimates for educational purposes only. Actual results depend on your specific business financials, lender terms, and market conditions. Consult a qualified financial advisor before making major business financing decisions.