Is invoice factoring a loan?

It is usually structured as selling or assigning receivables rather than a standard loan, but the economic cost should still be compared carefully.

What is an advance rate?

The advance rate is the percentage of the invoice amount paid upfront before the customer pays.

Why annualize the cost?

Annualizing helps compare different invoice terms, but it is not an official APR disclosure or a substitute for the contract.

Invoice Factoring Calculator

Estimate cash advanced, held reserve, factoring fees, reserve release, net cash, and annualized cost for invoice factoring.

Invoice amount ($)

Advance rate (%)

Factoring fee (%)

Payment term (days)

Additional fees ($)

What this invoice factoring calculator estimates

English factoring intent is B2B and invoice-specific: users compare how much cash they receive up front, how much reserve is held, and how much the factoring company keeps as fees when the customer pays.

Cash advanced from invoice amount and advance rate.
Held reserve before fees.
Factoring fee and optional additional fees.
Reserve released, net cash, and annualized cost estimate.

Quote can differ

Real factoring offers can include minimums, ACH fees, float days, credit checks, recourse terms, industry limits, and customer-specific underwriting.

Invoice factoring formulas

A d v an ce = I n v o i ce am o u n t \cdot A d v an ce r a t e

The advance is the cash paid before the customer pays the invoice.

R eser v e = I n v o i ce am o u n t - A d v an ce

The reserve is held back until collection, then reduced by fees.

N e t c a s h = A d v an ce + max (R eser v e - F ees, 0)

If fees exceed the reserve, review the quote carefully before signing.

Inputs that matter most

Input	Why it matters
Advance rate	Typical offers often advance a percentage of the invoice rather than the full amount.
Factoring fee	Usually quoted as a percentage, but providers can use different fee schedules.
Payment term	Longer customer payment time can raise the annualized cost comparison.
Additional fees	ACH, lockbox, credit-check, minimum, or same-day funding fees can change net cash.

Frequently Asked Questions

Sources and References

Calculations are based on the listed reference sources. Links open in a new tab.

Updated: June 2, 2026

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