Calculator

What Does Factoring Cost?

Factoring a $10,000 invoice at 85% advance with a 1%/week fee collected in 4 weeks gives a net advance of $8,100 after a $400 fee — an effective cost of 4% of the invoice. Over a year that compounds far higher, so use it for timing, not permanent financing.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

Advance = Invoice x Advance%. Fee = Invoice x Weekly Fee% x Weeks. Net Advance = Advance - Fee. Weekly factoring fees look small but annualize sharply; compare the effective cost to a line of credit. This is standard receivables-financing math.

What Should You Do?

Scenario 1: a 2%/week fee for 6 weeks costs 12% of the invoice — often pricier than a credit card. Scenario 2: a higher advance (95%) helps cash but the fee still bites. Scenario 3: if you collect in 1 week, cost drops to ~1% — factoring then beats a loan for a one-off gap.

Frequently Asked Questions

When is factoring worth it?

For a short, unavoidable timing gap where the customer is slow but certain. Not as ongoing financing.

Advance vs fee trade-off?

A bigger advance helps liquidity now but does not reduce the fee; focus on the weekly rate and weeks.

Cheaper alternative?

A line of credit usually costs less long-term — see our Line of Credit tool.

Authoritative References

SBA — Asset-Based Lending — SBA resources on receivables financing.
Investopedia — Factoring — Invoice factoring costs and mechanics.