Slow-paying B2B customers
You invoice on net terms and solid customers pay late. Factoring turns those receivables into working capital without taking on a fixed loan payment.
Explore invoice factoring →Invoice Factoring Calculator
See what factoring an invoice really costs: your cash advance up front, the factoring fee, and the reserve you get back after your customer pays. Works for any B2B invoice, including freight factoring for trucking. Free, instant, no signup.
3-minute application · No credit impact to check options · Offers within hours
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Estimate Your Factoring Cost
Enter your invoice, advance rate, and quoted fee to see your cash up front, your reserve, and the total cost: nothing submitted, nothing stored.
What Is Invoice Factoring?
Invoice factoring is selling an unpaid customer invoice to a factoring company for immediate cash. The factor advances most of the invoice’s face value up front, collects payment from your customer, then releases the remaining reserve to you minus its fee. You get working capital now instead of waiting 30 to 90 days.
Step by step, a factored invoice moves like this:
- You deliver the work or the load and issue the invoice as usual.
- You sell that invoice to the factor, which verifies it with your customer.
- The factor wires the advance: in this calculator, 70% to 95% of face value.
- Your customer pays the factor on their normal terms.
- The factor releases your reserve, minus the factoring fee.
How Do You Calculate Factoring Costs?
Multiply the invoice amount by the quoted fee percentage, then scale by time outstanding: fee = invoice amount × fee rate × (days to payment ÷ 30). Add any extra charges from your agreement, then divide the total by the invoice amount to see your effective cost as a percentage of the invoice.
Worked example (the calculator’s defaults). A $20,000 invoice, an 85% advance rate, a 3% fee per 30 days, and a customer that pays in 45 days:
- Cash advanced up front: $20,000 × 85% = $17,000
- Factoring fee: $20,000 × 3% × (45 ÷ 30) = $20,000 × 3% × 1.5 = $900
- Reserve released after payment: $20,000 - $17,000 - $900 = $2,100
- Total received: $17,000 + $2,100 = $19,100, so the total cost is $900, or 4.50% of the invoice.
For illustration only, not an offer or financial advice.
What Is the Difference Between Recourse and Non-Recourse Factoring?
Recourse factoring leaves non-payment risk with you: if your customer never pays, the factor can charge the invoice back to you. Non-recourse factoring transfers defined risks, often customer insolvency, to the factor in exchange for higher pricing. Read the credit terms carefully, because coverage varies between factors and is often narrower than the label suggests.
How Does Freight Factoring Work?
Freight factoring is invoice factoring built for trucking: a carrier delivers a load, invoices the broker or shipper, and sells that invoice to keep fuel and payroll moving instead of waiting on slow broker payments. The math above is identical, so this page doubles as a freight factoring calculator for owner-operators and fleets.
Plug in the load’s invoice amount, the fee on your factoring quote, and the days your brokers really take to pay. If the numbers make sense, see how our invoice factoring program works, and if you need capital for fuel, repairs, or adding a truck rather than a single invoice, start with trucking business funding.
When Does Factoring Make Sense?
Factoring makes sense when the money is already earned and the only problem is the wait: solid B2B or freight customers on net terms who reliably pay, just slowly. If your cash gap comes from something else, like seasonality or a one-time purchase, a different structure may cost less.
Trucking and freight
Loads are delivered but broker payments lag while fuel, insurance, and drivers can’t wait. Freight factoring and trucking-specific funding keep the wheels turning.
See trucking funding →Small, frequent gaps
If cash-flow dips are modest and recurring rather than tied to one big invoice, a revolving line you draw and repay as needed may fit better.
Look at a line of credit →Not sure which structure fits? Compare funding options side by side, brush up on working capital basics, or try the other free tools on our business calculators hub, including the business funding calculator.
Factoring Calculator FAQs
How is an invoice factoring fee calculated?
Most factors quote a fee as a percentage of the invoice face value per 30 days outstanding. Multiply the invoice amount by the fee rate, then scale by how long the invoice stays unpaid. A $20,000 invoice at 3% per 30 days that pays in 45 days costs $20,000 x 3% x 1.5 = $900. The calculator above runs that exact math on your numbers.
What is an advance rate in invoice factoring?
The advance rate is the share of the invoice's face value the factor wires you up front; this calculator models 70% to 95%. The rest is held in reserve. Once your customer pays the invoice, the factor releases the reserve back to you, minus the factoring fee. Creditworthy customers and clean, verified invoices generally support higher advance rates.
What is the difference between recourse and non-recourse factoring?
With recourse factoring, you remain responsible if your customer never pays: the factor can charge the invoice back to you. Non-recourse shifts defined non-payment risks, such as customer insolvency, to the factor and is usually priced higher for that protection. Read your agreement carefully, because non-recourse coverage is often narrower than the name suggests.
Is invoice factoring a loan?
No. Factoring is structured as the sale of a receivable rather than borrowing, so approval leans on your customer's payment strength as much as your own credit profile. That can make it a practical option for newer businesses or owners rebuilding credit. Compare it with loans and credit lines side by side in our funding comparison guide.
Does this work as a freight factoring calculator?
Yes. Freight factoring uses the same math: a carrier or owner-operator sells a delivered load's invoice, receives an advance, and collects the reserve after the broker or shipper pays. Enter your load invoice, your quoted fee, and the days your brokers actually take to pay. For trucking-specific options, see our trucking business funding page.
Are these factoring results an offer?
No, this calculator is for illustration only. Real factoring pricing depends on your customers' credit, invoice size and volume, your industry, and your agreement's terms, including any minimums or extra fees this simple model leaves out. To see what you actually qualify for, apply online in under 3 minutes with no credit impact.
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Open the tool →Invoice Factoring
Turn unpaid B2B invoices into working capital.
Read the guide →What Is a Factor Rate
How factor-rate and fee math actually works.
Read the guide →Freight Factoring Rates
What truckers pay to factor freight invoices.
Read the guide →Want These Numbers in Your Inbox?
We’ll send you a copy of the factoring estimate you just ran so you have it when you’re comparing quotes. A real advisor may follow up once by email: no spam, no drip campaign.
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