Business Finance2026/27
Invoice Factoring Calculator
Calculate the cost and benefits of invoice factoring - sell your invoices to release cash and outsource credit control.
Factoring Details
Enter your invoice and factoring terms
Typically 70-85% of invoice value
Service fee for managing invoices
Bad debt protection (optional)
Factoring Analysis
Immediate Cash Available
£38,250
After factoring fees deducted
Total Cost
£1750.00
Effective Rate
3.50%
Invoice Value£50,000
Advance (80%)£40,000
Less: Factoring Fee-£1500.00
Less: Credit Protection-£250.00
Net Advance Received£38250.00
Balance on Collection£10,000
Total After Collection£48250.00
Annualised Cost: 21.3% APR equivalent
About Invoice Factoring
What is Invoice Factoring?
Invoice factoring involves selling your unpaid invoices to a factoring company at a discount. The factor advances you most of the invoice value immediately and takes over responsibility for collecting payment from your customers.
Types of Factoring
- Recourse Factoring: You remain liable if customers don't pay (cheaper)
- Non-Recourse Factoring: Factor absorbs bad debt risk (more expensive)
- Selective Factoring: Choose which invoices to factor (spot factoring)
- Whole Turnover: All invoices are factored (lower rates)
Factoring vs Invoice Discounting
- Credit Control: Factor handles collections (vs you doing it)
- Disclosure: Customers know (disclosed on invoices)
- Cost: Usually more expensive due to credit control service
- Suitability: Better for SMEs without dedicated credit control
Typical Factoring Costs (2026)
- Advance Rate: 70-85% of invoice value
- Service Fee: 0.5-3% of invoice value
- Discount Charge: 1.5-3% over base rate
- Credit Protection: 0.5-1% (if required)