Invoice Factoring Calculator — Fees, Reserve and APR

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See what factoring an invoice really costs: cash up front, the factoring fee per 30 days, the reserve you get back and the APR on the money advanced.

By Konstantin Iakovlev · Updated September 2026 · Source: Regulation Z Appendix J; California 10 CCR § 943 (factoring disclosures)

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Cash now

$8,000.00

Factoring cost

$600.00

APR on the cash advanced

60.83%

Where the invoice money goes

Invoice$10,000.00
Advance paid to you now$8,000.00
Factoring fee (6.00% of the invoice for 45 days)$600.00
Reserve paid to you when the customer pays$1,400.00
Total you receive$9,400.00
Cost as a share of the invoice6.00%
APR on the cash advanced60.83%

The APR divides the cost by the cash you actually received, not by the invoice amount; quoting the fee as a percentage of the invoice understates it. It is the single-payment form of the Truth in Lending actuarial method that California uses for factoring disclosures. With recourse factoring you must buy back an invoice your customer does not pay.

Use the Invoice Factoring Calculator — Fees, Reserve and APR above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Invoice factoring turns unpaid invoices into cash. A factor advances most of an invoice now, often 70% to 90%, collects from your customer, and pays you the rest (the reserve) minus its fee when the customer pays. The fee is usually a percentage of the invoice for each 30 days it stays unpaid, charged either per started 30-day block or prorated by day.

Quoting the fee as a share of the invoice makes factoring look cheap. The honest comparison is the APR on the cash you actually receive: the cost divided by the advance, annualized over the days until the customer pays. That is the single-payment form of the Truth in Lending actuarial method that California applies to factoring in its commercial financing disclosures.

Other fees add up: wire or ACH fees, due-diligence and setup charges taken from the advance, and fees deducted from the reserve. With recourse factoring you must buy back any invoice your customer does not pay, so the fee does not cover credit risk; non-recourse factoring costs more because the factor takes that risk.

Example: $10,000 Invoice Paid in 45 Days

  1. 1 Input: a $10,000 invoice, an 80% advance and a fee of 3% for each 30 days or part of it; the customer pays in 45 days.
  2. 2 Cash now: $8,000. Fee: two 30-day blocks, 6% of $10,000 = $600.
  3. 3 Reserve: when the customer pays, $10,000 − $8,000 − $600 = $1,400 comes back, so the business receives $9,400 in total.
  4. 4 Result: $600 on $8,000 for 45 days is an APR of 60.83%; the same fee prorated by day would be $450 and 45.63%.

Source: Regulation Z Appendix J; California 10 CCR § 943 (factoring disclosures) · Last updated: September 2026

Frequently Asked Questions

How much does invoice factoring cost?
Factoring fees commonly run about 1% to 5% of the invoice for each 30 days it is outstanding, plus any wire, setup or due-diligence fees. On an 80% advance, a 3% monthly fee works out to roughly 45% to 60% a year on the cash received, depending on how the days are counted.
What is the reserve in factoring?
The part of the invoice the factor holds back, usually 10% to 30%. When your customer pays, you receive the reserve minus the factoring fee and any other charges.
What is the difference between recourse and non-recourse factoring?
With recourse factoring you must buy back an invoice your customer fails to pay. Non-recourse factoring shifts that credit risk to the factor, usually for a higher fee and only for customer insolvency.
Why is the factoring APR higher than the fee?
The fee is quoted on the whole invoice, but you only receive the advance, and only for a few weeks. Dividing the cost by the cash you actually get and annualizing it over the days outstanding gives the true yearly cost.

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