Factoring Calculator

The Factoring Calculator helps users calculate the financial implications of factoring an invoice, including the advance received, factoring fees, reserve amount, and the net amount after fees, as well as the effective annual percentage rate.

Use Our Factoring Calculator

Step-by-Step Guide to Using the Factoring Calculator

Understanding the Inputs

Begin by gathering the necessary information required to use the Factoring Calculator. This calculator requires the following inputs:

  • Invoice Amount ($): Enter the total amount of the invoice in question. This must be a number between 1,000 and 10,000,000.
  • Advance Rate (%): This is the percentage of the invoice amount that will be advanced. Enter a number between 1 and 100, with a precision of up to one decimal place.
  • Factoring Fee (%): Enter the agreed-upon factoring fee percentage. This should be a number between 0.1 and 20, with a precision of up to one decimal place.
  • Payment Term (Days): Input the number of days in the payment term. This should be a number between 1 and 180.

Entering the Inputs

Use the interface to input the relevant data:

  1. Locate the field labeled Invoice Amount ($) and type in the invoice amount.
  2. Find the field marked Advance Rate (%) and enter the chosen advance rate percentage.
  3. Proceed to the Factoring Fee (%) field and provide the applicable fee percentage.
  4. Finally, in the Payment Term (Days) field, indicate the number of days for the payment term.

Examining the Results

Once you have entered all the required inputs, the calculator will automatically compute the following results:

  • Initial Advance Amount: This is the initial amount advanced from the invoice. Calculated as: invoiceAmount * (advanceRate / 100).
  • Factoring Fee Amount: Represents the fee levied for factoring, computed as: invoiceAmount * (factoringFee / 100) * (termDays / 30).
  • Reserve Amount: This is the portion of the invoice not advanced, calculated with: invoiceAmount - (invoiceAmount * (advanceRate / 100)).
  • Net Amount (After Fees): The remaining amount after factoring fees have been deducted, using: invoiceAmount - factoringFeeAmount.
  • Effective Annual Percentage Rate (APR): This is the annual rate reflecting the cost of factoring, calculated as: (factoringFee * (365 / termDays)).
  • Total Cost of Factoring: The complete cost associated with factoring, shown as: factoringFeeAmount.

Interpreting the Results

Each result is automatically formatted for clarity. Amounts are presented as currency in USD, with two decimal places for accuracy, and the APR is displayed as a percentage with two decimal precision. Review these figures to assess the financial impact of factoring your invoice under the specified terms.