True cost of factoring an invoice. The Invoice Financing Cost Calculator takes invoice value, advance rate, fee per 30 days outstanding, days until the customer pays, processing fee and returns effective annual cost (apr) plus total cost of financing, cash advanced now, paid to you when the customer pays. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
The headline interest rate is only part of what a loan costs: fees, the structure of repayments and how the rate is quoted (flat or reducing) all change the true cost. Compare offers on total interest and effective rate, not on EMI alone. Use the worked example below to check the maths against your own figures.
How the Invoice Financing Cost Calculator works
Factoring fees look small per month but the money is borrowed for a short time, so the annualised cost is often 20–40%. Compare it with an overdraft or a discount for early customer payment.
Worked example
With the example values (invoice value of $100,000, advance rate of 85%, fee per 30 days outstanding of 2%, days until the customer pays of 60 days, processing fee of $250), the effective annual cost (apr) is 30.42%; total cost of financing $4,250.00, cash advanced now $85,000.00, paid to you when the customer pays $10,750.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
Related Calculators
Frequently Asked Questions
How is effective annual cost (apr) calculated?
cost = invoice × fee × days ÷ 30 + processing; APR = cost ÷ cash advanced × 365 ÷ days.
Which figures do I need?
Invoice value, advance rate, fee per 30 days outstanding, days until the customer pays, processing fee. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Does the result include fees and charges?
Only where there is a fee input. Processing fees, insurance and prepayment charges add to the true cost; the APR and loan comparison calculators include them.
