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Advance received when the invoice is sold.
Invoice Factoring Calculator
Estimate the real cost of factoring an unpaid invoice. See cash advanced today, reserve release, total fees, effective APR and whether a line of credit would be cheaper.
days
days
Factoring fees plus fixed fees.
Annualized cost on the cash advanced.
Cash returned after customer payment and fees.
Cost verdict
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Enter invoice terms to evaluate the cost.
Credit line cost
$0
Estimated cost at the alternative APR.
Break-even cost
$0
Maximum cost to match the alternative APR.
1Invoice sold
You assign the invoice and receive the advance.
2Customer pays
The factor collects payment after the selected days.
3Reserve settles
Fees are deducted and any reserve is released.
| Days | Fee | Total cost | Effective APR | Reserve release |
|---|
How to use the Invoice Factoring Calculator
- Enter the invoice amount, the advance rate offered by the factor and the factoring fee quoted in the proposal.
- Set the fee period and the number of days until your customer is expected to pay. Use full fee periods if the agreement rounds partial periods up.
- Add fixed fees such as wire fees, setup fees or service charges, then compare the result with an alternative credit APR.
- Review cash now, reserve release, total cost and effective APR before deciding whether the speed is worth the price.
- Use the 30, 60 and 90 day stress test to see how late customer payment changes the economics, then copy the summary or download a formatted Excel workbook.
Power feature: true cost bridge
The power feature is the true cost bridge: it turns a factoring quote into the four numbers business owners actually need. You see the cash received today, the reserve held back, the cost deducted later and the effective APR that makes the offer easier to compare with a loan or line of credit.
Many factoring pages show only the advance and headline fee. This tool adds the missing decision layer: alternative APR comparison, break-even cost and a delay stress test. That matters because a small fee can become expensive when it is charged for a short funding window or rounded up to full billing periods.
Invoice Factoring Calculator vs Loan Calculator
Use this tool when the decision starts with an unpaid invoice, an advance rate, a reserve and a factoring fee. Use the Loan Calculator when the decision starts with a principal amount, interest rate, repayment term and amortized monthly payments. Separating those workflows prevents factoring from being confused with ordinary debt repayment.
Sources and limits
The structure follows common descriptions of factoring and receivables financing from the U.S. Small Business Administration, SCORE and NerdWallet. Those sources describe fast cash against unpaid invoices, advance percentages, factoring fees and the difference between invoice factoring, invoice financing and traditional loans.
This calculator is an educational estimate, not a quote, contract review or financing recommendation. It does not model recourse liability, customer default, monthly minimums, dispute reserves, concentration limits, personal guarantees, UCC filings, renewal terms or industry-specific fees. Read the agreement and compare offers before assigning invoices.
Frequently asked questions
What does this invoice factoring calculator estimate?
This calculator estimates the cash you receive now, the reserve held back, factoring fees, fixed fees, reserve release, total cost and effective APR for selling an unpaid invoice. It is designed for planning and comparison, not for producing a binding quote from a factoring company. Real agreements can include extra terms that change the final cost.
How is the effective APR calculated?
The effective APR compares the total factoring cost with the amount of cash advanced today, then annualizes that cost over the number of days until the customer pays. This makes short-term factoring fees easier to compare with a loan or line of credit, even though factoring is usually structured as a sale of receivables rather than a traditional loan.
What is an advance rate?
The advance rate is the percentage of the invoice value paid to your business upfront. If a $25,000 invoice has an 85% advance rate, the first cash payment is $21,250 and the remaining $3,750 becomes reserve. The reserve is usually released after the customer pays, minus fees and any other agreed charges.
What is the difference between invoice factoring and a business loan?
Invoice factoring usually means selling an unpaid invoice to a factor at a discount, while a business loan means borrowing money and repaying it over time. That distinction changes the workflow: factoring focuses on invoice value, advance rate, reserve, customer payment timing and fees. A loan calculator focuses on principal, interest rate, term and amortized monthly payments.
Why can factoring look cheap but have a high APR?
A factoring fee such as two or three percent can look modest because it is quoted against the invoice amount. The effective APR can be much higher because the fee is paid for a short period and the business only receives part of the invoice upfront. Annualizing the cost helps show the real price of fast cash compared with other financing choices. To calculate sales tax or VAT on invoice totals, see the VAT & Sales Tax Calculator.
Does this calculator handle recourse and non-recourse factoring?
The calculator can compare the cost of the fee structure you enter, but it does not model legal responsibility if a customer fails to pay. Recourse and non-recourse agreements can shift risk in different ways, and contracts may add minimum fees, reserves, personal guarantees or dispute rules. Read the agreement carefully before relying on a headline fee.
Are my invoice numbers saved or sent anywhere?
No. The calculations run entirely in your browser with client-side JavaScript. Your invoice amount, fee rate, advance rate, days outstanding and comparison APR are stored only in sessionStorage so the page can survive a refresh in the same tab. sessionStorage is cleared when you close the tab, and PureTools has no backend database for these values. Your data is never used to train AI models or improve machine learning systems.