Every factoring calculator online is published by a factoring company. This one is published by a broker who gets paid the same no matter which factor you pick — so it has no reason to flatter anyone's pricing. Enter a quote below. Enter two and compare them.
Annualized cost is the right way to compare two factoring quotes against each other, and it is the only way to catch a quote that hides its money in fees rather than in the headline rate. It is not a fair way to compare factoring against a bank loan. You pay only while an invoice is outstanding, and you stop paying the day you stop factoring. There is no balance sitting there accruing interest.
What the alternatives actually cost
Factoring is expensive money next to a bank. It is cheap money next to the two things most businesses actually do instead. The number above is there so you can tell a fair factoring quote from a bad one, not to talk you out of factoring.
The link carries your numbers, so you can send it to a partner or your accountant and they will open the same comparison. Nothing is stored on this site and nothing is sent to us unless you choose to get in touch.
The headline rate is rarely where the cost lives. Before you sign anything, find these five items in the contract:
Quotes are given as a small percentage per 30 days, which is why they sound cheap. Here is the same quote written out as dollars and as an annual rate.
A $100,000 invoice. The factor quotes 3% per 30 days with a 90% advance. Your customer pays on day 45. There is a 0.5% wire and processing fee.
| Invoice face value | $100,000 |
| Advanced to you on day 1 (90%) | $90,000 |
| Days outstanding | 45 |
| Rate periods charged (45 days rounded up to two 30 day periods) | 2 |
| Discount fee (3% x 2 periods x $100,000) | $6,000 |
| Wire and processing (0.5%) | $500 |
| Rebate paid when your customer pays ($100,000 less $90,000 less fees) | $3,500 |
| Total cost of financing $90,000 for 45 days | $6,500 |
As an annual rate: $6,500 on $90,000 is 7.22% for 45 days. Annualised, that is 7.22% x (365 / 45) = about 59% a year.
The quote said 3%.
If that same factor charged for the actual 45 days rather than rounding up to two full periods, the discount fee would be 4.5%, or $4,500. Add the $500 wire fee and the total is $5,000, which annualises to about 45% a year.
Same headline rate. Same invoice. A difference of $1,500 on one invoice, decided entirely by one line in the contract about how partial periods are counted. On $2m of annual volume that single clause is worth roughly $30,000 a year.
This is the number to ask for before you sign: how are partial periods billed, and is there a minimum period?
Most factoring quotes land between 1% and 3% per 30 days on the invoice face value, plus wire, processing and sometimes monthly minimum fees. On a 45 day payment cycle that typically works out to somewhere between 25% and 60% a year once everything is counted. The headline percentage is not the annual rate, and it is not charged on the money you actually receive. It is charged on the full invoice while you only get the advance.
It means 3% of the invoice face value for each 30 day period the invoice is outstanding. The critical detail is what happens to partial periods. Many agreements round up, so an invoice paid on day 31 is charged two full periods, or 6%. Some charge in 15 day or 10 day increments, which is fairer. Ask specifically how partial periods are billed before comparing two quotes, because two factors quoting the same 3% can differ by 30% or more in what you actually pay.
Almost never on rate. A bank line might cost 9% to 13% a year against 25% to 60% for factoring. Factoring wins on availability and speed, not price. It is underwritten mainly on your customers' credit rather than yours, so a young company, a thin credit file or one bad year does not disqualify you, and funding can happen in days. The honest way to think about it is that factoring is what you use when a line is not available yet, or when the growth it funds is worth more than the cost.
With recourse factoring, if your customer never pays, the factor charges the invoice back to you and you carry the loss. With non-recourse, the factor absorbs the credit loss if your customer becomes insolvent. Non-recourse costs more and the protection is narrower than it sounds, because it usually covers only insolvency, not slow payment, disputes or deductions. Read the definition of the covered event rather than the label.
Five places, in rough order of how much they cost: how partial periods are rounded, monthly or annual minimum volume fees you pay whether you factor or not, the advance rate itself since a 10% reserve is your money held back, wire and ACH fees charged per invoice, and termination or notice provisions that lock you in for a year or more with an early exit penalty.
With standard notification factoring, your customers are told to pay the factor instead of you, so they will know. In most industries where factoring is normal, including trucking, staffing and government contracting, this raises no eyebrows at all. If it would be a problem in your industry, ask about non notification facilities or an asset based line instead, which achieve something similar without contacting your customers.
Send over the proposal or the contract and we'll tell you plainly what it costs and where the traps are — free. We're a commercial finance brokerage working across 50+ lenders, including factors that work with brand-new authorities and startup brokerages. The review itself is free; if we end up placing your financing, we charge a small fee at closing. And because clean books make everything easier — from factoring approvals to taxes — we also help new carriers set up a proper accounting system in Xero from day one.
Email the quote to Mike Call / text 914.419.3059 Start an A/R applicationEstimates are for comparison only and assume the figures you enter; actual contract terms govern. Not every business qualifies for every program. NTIB Finance & Consulting is a commercial finance brokerage, not a lender.