TOOLS

Invoice Factoring ^Calculator

The Invoice Factoring Calculator helps businesses estimate the cash that could be unlocked against unpaid invoices. Many firms use platforms or brokers like Funding Agent to manage quotes and paperwork. This calculator is ideal for firms looking to improve cash flow efficiently. Understanding invoice factoring and its terms is key to making informed financing decisions. Learn more about invoice factoring and invoice financing options.

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Invoice Factoring Calculator

Invoice Amount

£1,000 £500,000

Specify the total value of invoices you want to factor.

Advance Rate

70% 95%

Set the percentage of invoice value advanced upfront.

Factoring Fee

1% 5%

Set the discount fee charged on the invoice value.

Payment Terms

Select the typical payment period for your invoices.

Advance Amount

£40,000

The cash you receive upfront from the factor.

Factoring Fee

£1,250

The total fee charged for the factoring service.

Net Amount

£38,750

The amount you receive after fees are deducted.

Unlock Your Cash Flow

Transform your outstanding invoices into immediate working capital. Our factoring solutions are designed to accelerate your business growth and improve cash flow management.

How To Use The Invoice Factoring Calculator

Enter invoice details

Input the face value of each outstanding invoice and the expected number of days until your customer is likely to pay. Accurate details ensure better cash flow forecasting. For more on invoice terms, see accounts receivable.

Choose provider terms

Add the advance rate, discount fee percentage, and any flat service fee quoted by your preferred factoring provider. Understanding these fees is crucial. Visit advance payment for related concepts.

Review cash outcome

The calculator displays the immediate advance, total fees, and net cash available. Use these figures to compare providers or funding options on a like-for-like basis. Explore more tools at Funding Agent calculators.

^Benefits of Using the Invoice Factoring Calculator

This tool translates complex fee structures into clear cash figures to check affordability and negotiate better rates. It also helps plan working capital with confidence. For detailed information, see invoice finance for small businesses and invoice financing for accountancy firms.

Improves cashflow forecasting

Strengthens supplier relations

Speeds payment cycles

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How Invoice Factoring is Calculated

Advance received

Cash advanced equals invoice value multiplied by advance rate.

Advance received

Advance (A) is calculated by multiplying the Invoice Value (IV) by the Advance Rate (AR). For example, a £10,000 invoice at 85% advance rate yields A = £10,000 × 0.85 = £8,500 available immediately.

Discount fee

Interest-style fee based on time outstanding.

Discount fee

The Discount Fee (DF) is calculated as IV × Discount Rate (DR) × Days Outstanding (D) ÷ 365. This fee mimics daily interest, meaning longer payment terms increase DF proportionally.

Net cash to business

Advance minus fees shows true cash benefit.

Net cash to business

Net Cash (NC) is the Advance minus the Discount Fee and any Service Fee (SF). Formula: NC = A – DF – SF. Subtracting these fees reveals the actual cash arriving in your account.

Understanding Your Invoice Factoring Calculator Results

Check liquidity boost

Compare the net cash figure with your short-term funding needs. If this covers payroll or stock purchases, the invoice factoring deal might be worthwhile. Learn how to manage cash flow effectively with cash flow resources.

Test sensitivity

Adjust days outstanding and discount rate inputs to see how slower customer payments or higher fees reduce your cash. Most UK SMEs experience 80-90% advances and monthly fees of 2-4%.

Note additional costs

Remember to consider credit control, audit fees, or recourse charges that vary by provider. The calculator assumes only core fees, so always confirm the full quote. Read more about potential service fees.