Invoice Factoring Calculator

How to use the calculator

Factoring quotes are usually presented as a list of percentages rather than pound amounts, which makes them hard to compare. This tool turns those percentages into a breakdown for one invoice, or a month's batch of invoices, so you can see what reaches your bank account and when. Start with the default figures, then replace them with anything a provider has quoted you.

1. Enter the invoice value

   Use the gross value including VAT, because providers normally advance against the gross amount. For a monthly picture, enter the total of a typical month's invoices.

2. Set the advance percentage

   Move the slider to the rate you expect. Published market ranges are commonly 70% to 90%, with some specialists up to 95% and construction often 50% to 70%.

3. Set the service fee

   This covers administration and, with factoring, credit control. Published ranges are roughly 0.75% to 3% for factoring and 0.2% to 1% for discounting.

4. Add any other charge

   Enter a discount charge or other cost either as a percentage of invoice value or as a fixed amount. Then read the breakdown on the right.

What each input means

Outstanding invoice value

The amount your customer owes on the invoice or batch you want to fund. Only invoices for completed, undisputed work to business customers are normally eligible; see who qualifies.

Estimated advance percentage

The proportion of invoice value the provider pays up front, also called the advance rate or prepayment. The rest is held as a retention until the customer pays.

Illustrative service fee

The provider's main charge, usually a percentage of invoice value or annual turnover. It is typically fixed for the life of the agreement and often subject to a minimum annual amount.

Illustrative additional charge

Any further cost for the period, most commonly the discount charge. Enter the pound amount or percentage you expect for the time the invoice will be outstanding, not an annual rate.

How the maths works

The calculator applies five formulas in order. Charges are deducted once, from the retained amount, so they are never double-counted.

1. Initial advance = invoice value × advance percentage
2. Amount retained = invoice value − initial advance
3. Total charges = service fee + additional charge
4. Final balance = amount retained − total charges
5. Total proceeds = initial advance + final balance

The "charges as a share of invoice" line divides total charges by the invoice value, which gives a simple cost per invoice that you can compare between quotes. If charges exceed the retained amount, the final balance would be negative and the provider would recover the shortfall from you; the calculator warns you when that happens.

Limitations of the calculator

• No time-based discount charge. The discount charge is an annual rate, typically quoted as a margin over Bank of England base rate or SONIA, applied only for the days funds are outstanding. Without a rate and a period it cannot be calculated, so the tool asks you to enter the expected cost instead. For a rough figure: advance × annual rate × days outstanding ÷ 365.
• No fixed fees. Arrangement fees, minimum monthly fees, audit fees, CHAPS fees and termination fees are not modelled. They can change the real cost significantly on small facilities. The costs guide lists them.
• No eligibility check. The tool assumes the whole invoice is approved. In practice disapproved debtors, concentration limits and disputed invoices reduce the fundable amount.
• No bad debt protection premium. Non-recourse facilities add a premium, often 0.5% to 1% of insured turnover, which you can approximate through the additional charge field.

Frequently asked questions