Invoice Factoring Calculator
This free invoice factoring calculator shows how much cash you get upfront from factoring an invoice — the advance, the factoring fee, the reserve released later, and the effective APR of the deal, so you can compare factoring against a loan.
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Enter your invoice details to see your advance, fees, and effective APR.
How to use this calculator
Enter the face value of your invoice, the advance rate your factor quoted (typically 70% to 95%), and the factoring fee — sometimes called the discount rate — as a percentage of the invoice.
If your fee repeats while the invoice is open, switch "Fee charged" to Every 30 days (tiered) and set how long the invoice will stay outstanding. Also choose whether the fee is withheld from your upfront advance or from the reserve released later — contracts differ, and it changes how much cash you get on day one.
The calculator instantly shows your upfront cash, the reserve held, the fee, your total cost, and the effective APR estimate so you can weigh the deal against a loan or line of credit.
How it works
Invoice factoring splits your invoice into two parts: the advance you get immediately and the reserve the factor holds until your customer pays.
advance = invoice amount × advance rate
reserve = invoice amount − advance
The fee is quoted as a percentage of the invoice. With a flat fee it is charged once; with a tiered fee it is charged again for every started 30-day period the invoice stays open:
fee = invoice amount × fee % × (periods, if tiered)
Depending on your contract, the fee is withheld from the advance (more cash withheld now, reserve released in full later) or from the reserve (full advance now, reserve released minus the fee). Your total cost is the fee, and across both payments you always receive invoice amount − fee.
To compare factoring with a loan, the calculator estimates an effective APR: the fee as a percentage of the advance, annualized over the days outstanding.
effective APR ≈ (fee ÷ advance) × (365 ÷ days outstanding) × 100
Note: this is a simple estimate, not a legally defined APR. It ignores origination charges, ACH/wire fees, and lockbox or minimum-volume fees some factors add. With recourse factoring you repay the advance if your customer never pays; with non-recourse factoring the factor takes the credit risk (usually for a higher fee, and typically only for insolvency — not for disputes or quality claims).
Frequently asked questions
How much of my invoice do I get upfront with factoring?
The upfront cash you receive is the advance: invoice amount multiplied by the advance rate (typically 70% to 95%), minus the factoring fee if your factor withholds it upfront. For a $10,000 invoice at an 80% advance rate and a 3% fee, you get $7,700 immediately. The remaining 20% (the reserve) is paid to you later when your customer settles the invoice.
What is the difference between the advance and the reserve?
The advance is the portion of the invoice paid to you right away — usually 70% to 95%. The reserve is the leftover balance the factor holds until your customer pays the invoice in full. Once the customer pays, the factor sends you the reserve minus the factoring fee (if the fee was not already deducted upfront). The reserve protects the factor if the customer pays late, disputes the invoice, or pays short.
What is recourse vs non-recourse factoring?
With recourse factoring, you must buy back the invoice (or repay the advance) if your customer fails to pay — you keep the credit risk, so fees are usually lower. With non-recourse factoring, the factor absorbs the loss if the customer becomes insolvent, but the fee is higher and the protection typically only covers credit-related non-payment, not disputes or quality claims. This calculator models the math the same either way; the difference shows up in the fee percentage your factor quotes.
How do I compare factoring cost to a loan?
Convert the factoring fee to an effective APR estimate: divide the fee by the cash actually funded, then multiply by 365 divided by the days the invoice is outstanding. Example: a $300 fee against a $7,700 upfront advance, repaid in 30 days, is about 47.4% APR. Factoring looks cheap as a percentage but expensive as an APR because the fee covers a short period. Compare it against a line of credit or business loan over the same number of days.
Are factoring fees tax deductible?
In most cases, factoring fees are treated as an ordinary business expense (a financing cost) and can be deducted against business income. How they appear on your books can depend on whether the arrangement is booked as a sale of receivables or as a secured loan. This is general information, not tax advice — confirm the treatment with your accountant.