{
  "slug": "invoice-factoring-cost",
  "title": "Invoice Factoring Cost Calculator",
  "heading": "Invoice Factoring Cost Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/invoice-factoring-cost",
  "summary": "The true annualized cost of selling an invoice early.",
  "description": "Factoring quotes look small as a flat percentage but are expensive as annualized money. This converts the discount fee into an APR you can compare to a loan.",
  "formula": "APR = fee ÷ advance × 365 ÷ days early.",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=invoice-factoring-cost",
  "inputs": [
    {
      "id": "invoice",
      "label": "Invoice amount",
      "kind": "number",
      "hint": null,
      "default": 20000,
      "unit": "$",
      "min": null,
      "max": null
    },
    {
      "id": "advance",
      "label": "Advance rate",
      "kind": "number",
      "hint": null,
      "default": 85,
      "unit": "%",
      "min": 50,
      "max": 100
    },
    {
      "id": "fee",
      "label": "Factoring fee",
      "kind": "number",
      "hint": null,
      "default": 3,
      "unit": "%",
      "min": 0.1,
      "max": null
    },
    {
      "id": "days",
      "label": "Days early",
      "kind": "number",
      "hint": null,
      "default": 45,
      "unit": null,
      "min": 1,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "apr",
      "label": "Annualized cost",
      "format": "percent",
      "hint": null,
      "primary": true
    },
    {
      "id": "fee",
      "label": "Fee paid",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "advanced",
      "label": "Cash advanced",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "net",
      "label": "Net received",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Invoice amount: 20000 $",
      "Advance rate: 85 %",
      "Factoring fee: 3 %",
      "Days early: 45"
    ],
    "outputs": [
      "Annualized cost: 28.6%",
      "Fee paid: $600",
      "Cash advanced: $17,000",
      "Net received: $19,400"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter invoice amount ($).",
      "Enter advance rate (%).",
      "Enter factoring fee (%).",
      "Enter days early.",
      "Read your annualized cost on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "invoice": 12000,
        "advance": 51,
        "fee": 1.7999999999999998,
        "days": 27
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "invoice": 20000,
        "advance": 85,
        "fee": 3,
        "days": 45
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "invoice": 32000,
        "advance": 100,
        "fee": 4.800000000000001,
        "days": 72
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "How does the invoice factoring cost calculator work?",
      "a": "Factoring quotes look small as a flat percentage but are expensive as annualized money. This converts the discount fee into an APR you can compare to a loan. The underlying maths is: APR = fee ÷ advance × 365 ÷ days early."
    },
    {
      "q": "What do I need to enter?",
      "a": "4 values: invoice amount, advance rate, factoring fee, and days early. Each field starts with a sensible default, so you can change one number at a time and watch the result move."
    },
    {
      "q": "What does the annualized cost result mean?",
      "a": "It is returned as a percentage and updates live as you edit the inputs, so you can compare two or three versions of a scenario in a few seconds."
    },
    {
      "q": "Is this calculator free, and do I need an account?",
      "a": "Yes, it's free, and no account is required. Nothing you type is stored on our servers — the maths runs entirely in your browser."
    },
    {
      "q": "How accurate is the result?",
      "a": "It applies the standard formula exactly, so the arithmetic is precise. Results are estimates before tax, fees, and inflation unless an input explicitly covers them."
    },
    {
      "q": "Who is this tool for?",
      "a": "It's built for anyone comparing money scenarios before committing — budgeting a payment, sanity-checking a quote, or seeing what a change in rate or term actually costs."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/late-payment-interest",
    "https://www.revenuelab.fyi/toolbox/cash-conversion-days"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Invoice Factoring Cost Calculator (https://www.revenuelab.fyi/toolbox/invoice-factoring-cost)"
}