How it works
Factoring cost measures the fees entered for converting an invoice into cash before collection. Apply the rate for the exact term in your agreement; the tool applies it once and does not infer periodic extensions.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
A $10,000 invoice at 2% costs $200 plus a $25 fixed advance fee and $15 additional charges: $240 total and $9,760 net proceeds. With a 90% advance and fees taken upfront, the initial payout is $8,760 and the later reserve release is $1,000.
Calculation method
Fixed advance fees and other charges are added to the percentage fee. The effective fee share divides all modeled charges by invoice face value, so it can exceed the headline percentage.
Interpretation
The optional advance percentage separates initial cash from the reserve held back. Reserve is delayed cash, not a fee. Select whether modeled fees are deducted upfront or from the later reserve release.
Limitations
This model does not infer tiered rates, recourse liability, late-payment charges or customer nonpayment. Negative payouts are displayed when entered fees exceed the relevant cash amount; check those assumptions against the agreement.
Using this in a dispatch decision
Keep withheld reserve separate from fees. A $1,000 reserve on a $10,000 invoice is delayed cash, not an extra $1,000 expense. The entered percentage applies once for the stated term; repeated or tiered fees require a separate calculation.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- ATRI — Trucking researchOperating-cost research context. No industry-average cost or contractual compensation rate is automatically used.
Frequently asked questions
Is the retained reserve an extra factoring fee?
No. Reserve is cash held back for later settlement. Fees reduce net proceeds; reserve changes when you receive the remaining proceeds.
What is a worked example for Factoring Fee?
A $10,000 invoice at 2% costs $200 plus a $25 fixed advance fee and $15 additional charges: $240 total and $9,760 net proceeds. With a 90% advance and fees taken upfront, the initial payout is $8,760 and the later reserve release is $1,000.