Invoice Factoring Calculator
Estimate the cash you could receive from unpaid invoices, the factoring fees, and the reserve released when your customer pays. Then compare waiting for payment with using the advance to take on more work.
Calculate invoice factoring costsEstimate your advance, fees, and cash flow
Compare cash timing and profit after fees
The defaults are illustrative. This models invoice factoring, not an equipment loan or an A/R credit line. This tool does not submit your inputs as a funding application.
Comparison
| Terms | Jobs: wait / factor | Wait for payment | Use factoring | Difference |
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View total fees, ending cash, and future receipts
| Terms | All expected factoring fees | Ending cash: wait / factor | Future net receipts: wait / factor |
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Future net receipts include unpaid customer invoices and unsettled reserves after the comparison ends, less modeled fees. They are not cash available today. Fees include the original invoice and every new invoice assumed factored, including expected fees through later customer payment.
How this calculator works and what it leaves out
Both scenarios begin with the same original invoice and other available cash. The waiting scenario collects each invoice at its Net 30, 60, or 90 date. The factoring scenario receives an advance after your entered delay, less a draw fee, and receives the remaining reserve after the monthly fee when the customer pays. The same terms and assumptions apply to new invoices.
The business completes one new job at a time, pays its direct cost upfront, and starts the next job only when cash, time, and the demand limit allow it. Jobs that cannot finish within the comparison period are not started. The model does not count an advance or collection of the original invoice as new revenue.
Sale value = direct cost / (1 – gross margin). Modeled gross profit after fees equals gross profit on completed new jobs minus all expected factoring fees. Expected fees are charged through the full payment term even when settlement falls beyond the comparison period. This is a scenario comparison, not an accounting income statement.
Customers are assumed to pay in full and on time. There are no additional facility limits, taxes, overhead, minimum-volume charges, bad debts, late fees, additional setup costs, or changing margins. Factoring all completed invoices is assumed; selective factoring could give a different result. It does not calculate APR or guarantee funding or profit.
How to use the invoice factoring calculator
- Enter your unpaid invoice and advance rate. Use the invoice face value and the percentage the factor proposes to advance.
- Add the monthly fee and draw fee. Open the assumptions panel to select whether each fee applies to the full invoice or the gross advance. Match the billing method to your quote.
- Select Net 30, 60, or 90. This highlights the customer payment scenario you want to inspect. The calculator compares all three.
- Set realistic job costs and demand. For the cash flow comparison, enter the cost, gross margin, and completion time of one new order. Set maximum new jobs to 0 if you only want to compare cash access and fees without extra sales.
- Select Calculate cash flow comparison. After changing inputs, calculate again to refresh the results. Open the detail table to see ending cash and future receipts separately.
Need help understanding the financing itself? Our invoice factoring guide covers eligibility, collections, recourse, and provider terms. This page focuses on the numbers.
Invoice factoring example: a $50,000 invoice
Suppose you factor a $50,000 invoice at an 85% advance rate. The monthly fee is 2% of invoice value, and a 1% draw fee applies to the gross advance. The advance arrives on day 2, the customer pays on day 60, and each started 30-day block is charged in full.
You receive $47,575 in total: $42,075 upfront and $5,500 at settlement. The $2,425 difference from the invoice value is the modeled cost. The reserve is not an additional charge; it is the portion held back before fees and adjustments.
What changes when the customer pays sooner or later?
| Customer pays | Total fees | Net reserve | Total received |
|---|---|---|---|
| Day 30 | $1,425 | $6,500 | $48,575 |
| Day 60 | $2,425 | $5,500 | $47,575 |
| Day 90 | $3,425 | $4,500 | $46,575 |
These examples use the same $42,075 upfront cash and a day-2 advance. They exclude other charges and assume full payment. They are illustrations, not quotes or promised funding dates.
How factoring fees and cash proceeds are calculated
The advance rate answers how much you receive early. The fee rate answers what you pay. They are different percentages, and the fee may use a different dollar basis from the advance.
- Gross advance: invoice value × advance percentage.
- Draw fee: selected fee basis × draw fee percentage.
- Initial cash: gross advance minus the draw fee.
- Monthly fees: selected fee basis × monthly fee percentage × billing units.
- Net reserve: invoice value minus gross advance minus monthly fees.
- Total received: initial cash plus net reserve, equal to invoice value minus all modeled fees.
Started billing blocks versus prorated fees
The calculator counts time from the advance date to customer payment. With started 30-day blocks, 31 days of funding means two billing units. With prorating, it means 31 ÷ 30 units. For example, on a $50,000 invoice at 2% per 30 days, that is $2,000 versus $1,033.33 before any draw fee. Your agreement may use a different schedule or stop fees only after funds clear.
Factoring is not a conventional loan
Invoice factoring is structured as selling receivables, rather than borrowing a term loan and repaying principal and interest. The Federal Reserve’s explanation of small-business financing describes the sale of unpaid invoices and the factor’s collection of customer payments.
This calculator charges fees against the selected invoice or advance amount. It does not compound unpaid fees. That does not mean every factoring agreement has one fixed cost regardless of time: time-based fees can rise when payment takes longer. A monthly factoring percentage is not APR, and this tool does not calculate APR.
Does earlier cash make the next job worthwhile?
An advance changes when you can use the money. It does not create a second sale from the original invoice. The cash flow model asks a separate question: can that earlier cash pay the direct costs of additional work you actually have available?
For example, a job costing $20,000 with a 20% gross margin produces a $25,000 sale and $5,000 of gross profit before factoring fees. The model funds one job at a time and applies factoring fees to new invoices too. It stops starting jobs when cash, demand, or time runs out.
The difference shown is gross profit after modeled factoring fees, not net income. Overhead and taxes are excluded. Fees include expected costs through settlement, even when the customer payment falls after the comparison period. Open the detail table before treating future receipts as spendable cash.
If you have no additional orders, use zero new jobs. If you already have enough cash to complete the work, enter it under other cash available. Both tests help avoid crediting factoring with sales you could have made anyway.
Invoice factoring calculator questions
Is this also an accounts receivable factoring calculator?
Yes. Accounts receivable factoring, A/R factoring, and invoice factoring describe the same type of receivables purchase. A loan secured by accounts receivable is a different arrangement.
How much cash will I receive from a $100,000 invoice?
At an illustrative 85% advance, the gross advance is $85,000. A 1% draw fee on that advance reduces initial cash to $84,150. The amount released later depends on the monthly fees and any other adjustments. Use your quoted advance and fee terms rather than assuming those example percentages apply.
Is the reserve a factoring fee?
No. The gross reserve is the part of the invoice not advanced. The factor deducts applicable fees and adjustments before releasing the balance. In the $50,000 example, the gross reserve is $7,500 and the net settlement after two monthly fees is $5,500.
Can I compare flat fees with monthly factoring fees?
The tool models monthly pricing with started blocks or prorating, plus a percentage draw fee. It does not have a separate fixed-dollar or one-time discount-fee mode. Do not enter a one-time fee as a recurring monthly rate. Ask the provider for a settlement example that matches its fee schedule.
What happens if a customer pays late?
Time-based fees may continue. This model compares payment on days 30, 60, and 90; it does not model defaults, disputed invoices, or every possible payment date. Ask the factor how late payment changes fees and whether you must repurchase or replace an unpaid invoice.
Can the reserve settlement be negative?
Yes, if modeled monthly fees exceed the held reserve. The calculator flags that result and includes the negative settlement in cash flow. It means the assumptions leave a payment owed rather than a reserve release. Your contract determines how that situation is handled.
Is a factor rate of 1.20 the same as a 2% factoring fee?
No. A 1.20 multiplier on an advance describes a different pricing convention from a 2% invoice fee. Do not enter a repayment multiplier into the monthly fee field. Confirm whether a quote describes purchasing invoices, a loan, or a revenue-based advance before comparing costs.
How should I compare factoring with a business line of credit?
Compare the cash received, total cost for the same period, repayment obligations, and customer collection process. Our business line of credit calculator estimates a separate borrowing structure. Neither result replaces the provider’s written terms.
Before relying on the estimate
Check the fee basis, billing increments, minimum charges, reserve-release conditions, and any setup, wire, or termination charges in the proposed agreement. This tool assumes all modeled invoices are paid in full and on time. It excludes taxes, overhead, bad debts, additional facility limits, and other charges.
Excel Capital helps arrange financing through third-party providers. The provider sets eligibility and terms. For more planning tools, visit our business financing calculators.