Invoice Factoring Cost Calculator
Estimate an invoice advance, factoring fee, reserve release and a simple annualized financing-cost comparison.
Cash advanced nowExample$8,000
- Total factoring fee
- $200.00
- Reserve released at collection
- $1,800
- Simple annualized financing cost
- 30.42%
How to calculate invoice factoring cost
Advance = invoice × advance rate; fee = invoice × total fee rate; reserve release = invoice − advance − fee; simple annualized cost = fee ÷ advance × 365 ÷ days
Fee is deducted from the reserve at collection. Input the full-period fee, not an unconverted monthly rate. No recourse losses, extra charges or legal APR calculation are included.
Worked example
An illustrative scenario. “Reset to example” restores it in the calculator.
- Invoice face value
- $10,000
- Advance percentage
- 80%
- Total fee for the entire collection period
- 2%
- Days until customer payment
- 30 days
Cash advanced now: $8,000
Invoice Factoring Cost FAQ
Why is annualized cost higher than the quoted fee percentage?
The fee applies to invoice face value, while funding is only the advance and may last fewer than 365 days. Annualization makes those assumptions explicit without compounding.