What your factoring facility actually costs.
Enter the terms from your agreement and your real days-to-pay. Nothing is sent anywhere, no email required — the arithmetic happens in your browser.
What it costs
- Advanced to you at funding
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- Held in reserve
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- Fee periods charged
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- Total fees on this invoice
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- Net cash to you after fees
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- Cost per dollar advanced
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- Effective annualized cost
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How to read the result
The number that matters is the effective annualized cost. It is the only figure that lets you compare a factoring facility to a line of credit, an ABL facility or an equipment loan, because those are all quoted annually and factoring is not.
The arithmetic is deliberately simple: total fees divided by the cash you actually received, annualized across the days your money was out. Two things it does not capture, both of which make your real cost higher:
- Monthly minimums. If you commit to a volume you do not hit, you pay the shortfall regardless. Spread that across the invoices you did factor and add it in.
- Reserve release timing. If your reserve is released weeks after your customer pays, that is more of your money sitting idle than this calculation assumes.
If your effective annualized cost surprises you, that is normal and it is the reason this page exists. The next question is not "is this bad" — it is whether the facility is still cheaper than the alternatives available to you at your credit profile, and whether you could be repriced. Often you can, particularly at renewal.
Run your real numbers past someone who has underwritten these.
Send us your agreement and a month of invoices. We will tell you what you are paying and whether it is worth moving.