Invoice Factoring Calculator

Invoice factoring converts unpaid customer invoices into immediate cash at a cost. The factor advances 70-90% of invoice value now, charges a factoring fee (1-5% per invoice), and may charge interest on the advance until the customer pays. Effective APRs typically run 15-40% annualised - expensive, but often cheaper than alternative short-term debt or stockouts.

100k invoice at 80% advance = 80k cash now. At 2% factoring fee (2k) and 12% interest over 45 days to customer payment (1,183), total cost is 3,183. Effective APR on the advance: 32.3%. Costly, but unlocks cash immediately instead of waiting 45 days.

Factoring applies when alternatives are worse: missing payroll, losing a growth opportunity, or stockout while waiting on receivables. It's a poor permanent financing choice - 25-40% APR compounds fast. Businesses using factoring consistently need to fix root cause: slow-paying customers, under-capitalisation, or working capital cycle issues. Treat it as tactical bridge, not strategic funding.

Quick example

With invoice amount of 100,000 and advance rate of 80% (plus factoring fee of 2% and days to customer pay of 45), the result is 3,183.56. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Invoice Amount, Advance Rate %, Factoring Fee %, Days to Customer Pay, and Interest Rate % (annual). Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

What's happening under the hood

Advance = invoice × advance %. Factoring fee = invoice × fee %. Interest = advance × rate × days/365. Total = fee + interest. APR = total / advance × 365 / days × 100. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Reading a low result

A disappointing result is information, not a judgement. The input that dragged the figure down most is usually where a single change has the largest effect, since depth on the worst input tends to move the result more than spreading effort across every input at once.

What this doesn't capture

The result reflects only the inputs you provide and the assumptions built into the formula. It is a simplified model rather than a complete picture, and factors specific to your situation may matter just as much.