Invoice Factoring Calculator
See your cash advance, factoring fee, and net proceeds from selling an unpaid invoice — plus the annualized cost for comparison.
How to use this calculator
Invoice factoring turns an unpaid invoice into cash today instead of waiting 30, 60, or 90 days for your customer to pay. You're not borrowing against the invoice — you're selling it, at a discount, to a factoring company. This calculator shows you exactly what that trade looks like in dollars.
Invoice Amount. The face value of the invoice you're factoring — what your customer owes you.
Advance Rate. The percentage of the invoice a factoring company pays you upfront, typically 70–95%. The remainder is held back as a reserve until your customer pays in full.
Factoring Fee. The cost of the service, charged per 30-day period the invoice is outstanding. Most quotes run 1–5%, and the fee scales up the longer your customer takes to pay.
Payment Terms. When your customer is expected to pay — 30, 45, 60, or 90 days. Because the fee is priced per 30 days, a longer term means a larger total fee.
Results update as you adjust each field, so you can see how a slower-paying customer or a different advance rate changes your total cost.
What you actually receive
Two payments make up your total proceeds. The cash advance arrives first — usually within a day or two of the factoring company purchasing the invoice. The reserve arrives second, once your customer pays the factor directly, minus the factoring fee.
Add them together and you get your net proceeds — what you keep from the invoice after the cost of getting paid early. On a $100,000 invoice at an 85% advance and a 2% fee, that's $98,000: nearly the full invoice value, just spread across two payments instead of one, with $2,000 as the cost of moving the second payment up by however many days your customer would otherwise have taken.
Recourse, non-recourse, and why the fee moves with time
This calculator models recourse factoring — the more common structure, used in roughly 80% of U.S. factoring volume. In a recourse arrangement, if your customer never pays, you're responsible for buying back the invoice or replacing it with one of equal value. Non-recourse factoring shifts that risk to the factor, who absorbs the loss if your customer becomes insolvent — but it typically costs 0.5–1.5% more, since the factor is pricing in credit risk on top of the service itself. Non-recourse coverage usually only applies to formal insolvency, not slow payment or a disputed invoice, so it's worth reading the specific terms before assuming it covers more than it does.
The factoring fee in this calculator is quoted per 30 days and scales with your Payment Terms selection — a fee on a 60-day invoice is roughly double the fee on the same invoice at 30 days, because you're paying for twice the time. Many real-world contracts go a step further with tiered pricing, where the rate increases again at each additional 15- or 30-day mark if a customer pays late. That's a detail worth asking about directly, since a low headline rate on a tiered contract can end up costing more than a flat rate once a customer runs past term.
Reading your results
Cash Advance. What arrives first — your invoice amount multiplied by the advance rate.
Factoring Fee. The total cost for the period the invoice is outstanding.
Reserve Amount. The portion held back until your customer pays.
Reserve Released On Payment. What you receive once your customer pays — the reserve minus the factoring fee.
Total Cost of Factoring. The full dollar cost of the transaction, equal to the factoring fee.
Net Proceeds. What you ultimately keep — your invoice amount minus the factoring fee.
Annualized Cost Equivalent. Your factoring fee expressed as an annual rate, so you can compare it against a line of credit or loan on equal terms. Factoring fees aren't interest — they're a flat cost per period, not a rate that accrues on a declining balance — so factoring companies aren't required to disclose an APR and rarely do. This figure exists purely so you can make that comparison yourself.
Factoring versus an advance against future revenue
If your business invoices other businesses on terms, factoring can often be a more efficient way to access cash than a merchant cash advance. A merchant cash advance prices the entire cost of capital against your future revenue, regardless of when a specific payment is expected — factoring prices the cost against one invoice and one known payment date, which is usually a much smaller number. On a $50,000 invoice at a 2% factoring fee, the cost is around $1,000; a merchant cash advance of the same amount can have a much higher cost of capital, since it's not tied to a single receivable with a fixed collection date. If you have unpaid B2B invoices sitting on terms, it's worth checking what factoring would cost before moving forward with a merchant cash advance.
Frequently Asked Questions
Common questions about how the calculator works and what the numbers mean.
Invoice factoring is the sale of an unpaid B2B invoice to a factoring company at a discount. The factor pays you most of the invoice value upfront, collects payment directly from your customer, then releases the remaining balance minus its fee. Because approval is based largely on your customer's ability to pay rather than your own credit history, factoring is often available to businesses that don't yet qualify for traditional financing.
It comes down to who absorbs the loss if your customer doesn't pay. With recourse factoring, the more common structure, you're responsible for buying back the invoice or replacing it with another of equal value. With non-recourse factoring, the factor absorbs the loss if your customer becomes insolvent, typically for an additional 0.5% to 1.5% in fees. Non-recourse protection usually covers formal insolvency only, not slow payment or disputed invoices, so it's worth confirming exactly what your agreement covers. This calculator models recourse factoring.
Your invoice amount multiplied by your advance rate. A $100,000 invoice at an 85% advance rate puts $85,000 in your account upfront. Advance rates typically range from 70% to 95% and depend mainly on your customer's creditworthiness and your industry. The remaining 15% is held as a reserve and released, minus the factoring fee, once your customer pays.
Factoring fees are usually quoted per 30-day period, so the total fee depends on how long the invoice is outstanding. A 2% fee on a 30-day invoice becomes roughly 4% on a 60-day invoice, since you're paying for twice the time. That's why the calculator asks when your customer is expected to pay: the same fee rate produces a different total cost depending on the answer.
The fee continues to accrue for each additional period the invoice remains outstanding. Many contracts also use tiered pricing, where the rate steps up at set intervals such as every 15 or 30 days past the original term. Under a recourse agreement, if the invoice goes unpaid past a specified window (commonly 60 to 90 days), you may be required to buy it back. If you have a customer who regularly pays late, model your cost using their actual payment timing rather than the invoice terms.
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