Factor

A 1.3 factor rate sounds low. Annualized, it can exceed 150% APR. Invoice factoring and merchant cash advances express their cost in ways that obscure the true price of capital -- factor rates, daily rates, advance rates, and reserve percentages instead of a simple interest rate. This calculator converts all of it into a true annualized APR so you can compare the real cost against a bank loan, SBA line, or any other financing alternative.

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Factor rate to true APR — Enter a factor rate (e.g. 1.25, 1.35) and the expected payback period. The calculator converts it to a true annualized APR using the actual daily cost of capital -- not a simplified estimate.

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Invoice factoring waterfall — Enter invoice face value, advance rate, factor fee, and reserve percentage. The calculator shows exactly how the invoice is split: cash advance today, reserve held back, fee deducted, and net cash received.

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Portfolio-level analysis — Add multiple invoices with different face values, advance rates, and terms. The calculator computes blended APR, total fees, total advance, and net cost across your entire factoring portfolio.

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Recourse vs. non-recourse — Model the cost difference between recourse factoring (you bear the credit risk if the customer doesn't pay) and non-recourse (factor absorbs bad debt). Non-recourse carries higher fees -- see the APR impact.

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Cost vs. bank loan comparison — Side-by-side comparison of your factoring cost against a bank term loan or SBA line of credit at the same advance amount. Shows total interest, effective rate, and dollar cost difference.

Factor RateTrue APRDaily RateAdvance RateCash TodayNet ReceivedFactor FeeReserve %vs Bank LoanPortfolio APR

What this calculator models

TrueAPR, not factor rate

MultiInvoice portfolio

2Recourse types

vsBank loan comparison

How an invoice is split

Invoice face value100%

Cash advance (today)70-90%

Reserve (held back)10-30%

Factor fee (cost)1-5%

Key inputs

Factor rateMultiplier on the amount advanced (e.g. 1.25 = 25% fee on advance).

Advance ratePercentage of invoice face value funded upfront. Typically 70-90%.

Payback periodDays until invoice is collected. Drives the annualized APR calculation.

Recourse typeRecourse: you repay if customer defaults. Non-recourse: factor absorbs bad debt (higher fee).

Why APR matters

ExampleA 1.3 factor rate on a 30-day invoice = ~365% APR. On a 90-day invoice = ~121% APR. Same rate, very different cost.

For informational purposes only. Not financial or lending advice. Factor rates and terms vary widely by industry, invoice quality, and customer credit. Always compare the true APR against alternative financing before signing.

Exit Adviser · Factoring Analysis

Invoice Funding
Proposal

DateOctober 27, 2026

Invoices3

Advance Rate85%

Fee Structure2.5% flat

RecourseRecourse

#	Invoice / Debtor	Face Value	Days	Advance	Factor Fee	Net Received	Eff. APR
1				$38K	−$1K	$44K	20.3%
2				$24K	−$713	$28K	15.2%
3				$61K	−$2K	$70K	30.4%
	3 Invoices — Portfolio Total	$146K	41d avg	$124K	−$4K	$142K	22.5%

Add invoice to portfolio

Funded

Pending

Overdue

Double-click any cell to edit invoice details inline

What does your factor rateactually cost you?

What does your factor rate
actually cost you?