Finance Lab
Invoice and debtor finance cost
See the real annual cost of funding your invoices, and what the cash actually buys you.
Cash advanced = invoice × advance rate. The cost is the discount or service fee plus interest for the days funded. That cost is expressed as an annual rate on the cash you actually received.
Step 1 · Enter your figures
Every box starts with an example figure. Replace each one with your own — the result updates as you type. Nothing you type is sent anywhere or stored.
Face value of the invoices you would put through the facility each month.
The percentage of each invoice paid to you up front.
The fee charged on the face value of each invoice.
Annual rate charged on the money advanced while it is outstanding.
How long the funds are drawn for.
Step 2 · Read the result
Effective annual cost of the facility
27.2%
The total cost expressed as an annual rate on the cash you actually received.
- Cash advanced each month
- $160,000
- Cost each month
- $5,367
- Cost over a year
- $64,405
- Held back until the invoice is paid
- $40,000
- Cash brought forward
- $160,000Money in your account now instead of in the days entered.
- Cash advanced each month$160,000
- Cost each month$5,367
- Cost over a year$64,405
- Held back until the invoice is paid$40,000
- Cash brought forward$160,000
What this answer rests on (9)
- Invoices funded each month$200,000
You entered this
Face value of the invoices you would put through the facility each month.
- Advance rate80.0%
You entered this
The percentage of each invoice paid to you up front.
- Service or discount fee1.5%
You entered this
The fee charged on the face value of each invoice.
- Interest rate on funds drawn12.0%
You entered this
Annual rate charged on the money advanced while it is outstanding.
- Days until the invoice is paid45 days
You entered this
How long the funds are drawn for.
- The rate you entered is the one applied. No rate, threshold or statutory figure is supplied by the platform — confirm it from the current published source before you rely on the result.
The calculator applied this
- Every invoice is funded on the same terms and paid on the day entered.
The calculator applied this
- Bad debts, recourse obligations, audit fees, minimum monthly fees and line fees are excluded unless included in the fee entered.
The calculator applied this
- A 365-day year is used for the interest calculation.
The calculator applied this
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Save to my workspaceWhat this means for you
The real annual cost of funding your invoices, expressed against the cash you actually receive.
How to read it
- The effective annual rate is the comparison figure — a fee that looks small on an invoice is large over a year.
- The amount held back is not lost, but you do not have it until the customer pays.
- Weigh the cost against what the earlier cash lets you do: buy better, take work on, pay suppliers early.
Watch out for
- Minimum monthly fees, line fees and audit fees that are not in the headline rate.
- Recourse. If the customer does not pay, you usually still do.
- Using the facility to fund losses rather than growth. It gets more expensive as it goes.
Assumptions behind this result
- The rate you entered is the one applied. No rate, threshold or statutory figure is supplied by the platform — confirm it from the current published source before you rely on the result.
- Every invoice is funded on the same terms and paid on the day entered.
- Bad debts, recourse obligations, audit fees, minimum monthly fees and line fees are excluded unless included in the fee entered.
- A 365-day year is used for the interest calculation.
General information only. This calculator does not take your circumstances into account and is not financial, tax, legal or investment advice. Confirm every rate, threshold and figure with your own adviser before acting.
Related calculators
Other tools in funding and finance.
Take this further
Members run this calculator on their own recorded figures, save the workings to their workspace, export them to Word or Excel, and read the lessons that teach the thinking behind the result.