Invoice finance calculator

How the cash released and the fee are worked out

The calculator starts from your invoice value (or a month's invoicing) and applies the advance rate you enter, typically 70% to 90%, to work out the cash released now. The rest, the retention, is held back by the lender and paid to you when your customer settles, less the fee. The fee here is charged as a percentage of the invoice value and bundles the two real costs in invoice finance: the service fee for running the facility and the discount charge (an interest-style cost on the funds you draw). Your net figure is simply the advance less that fee. The headline that surprises people is the effective annual cost: the calculator takes the fee, then annualises it over your average days to payment using 365 divided by those days. So a 2.5% fee on money outstanding for 45 days annualises to roughly 20%, not because the facility is expensive in cash terms, but because you only borrow the money for six or seven weeks. The true cost is the fee itself; the annualised figure just lets you compare it like for like against a loan or an overdraft.

Factoring or discounting, confidential or disclosed, whole-turnover or selective

Invoice finance is really a set of structural choices, and each one changes cost, control and who knows about it. Factoring means the lender takes over your sales ledger and chases payment directly; it suits smaller or younger businesses that would rather outsource credit control, and the collections service is part of what the fee buys. Invoice discounting means you keep credit control and chase your own customers, which suits larger, established firms with a solid finance function, and it is usually cheaper because you are doing the legwork. Cutting across that is confidential versus disclosed: with a confidential facility your customers never know a funder is involved, so relationships are unaffected; with a disclosed one they pay into a trust account and can see the arrangement. The last choice is whole-turnover (your entire ledger is funded, giving the keenest pricing because the lender spreads risk) versus selective or spot factoring (you fund one debtor or one invoice at a time, more flexible but priced higher). We model these against your ledger so you are not paying for a service you do not need.

What genuinely drives the fee and the advance rate

Invoice finance is underwritten against your debtor book, not just your balance sheet, so the ledger does most of the talking. The biggest levers are: debtor quality and spread. A ledger of solid, creditworthy trade or corporate customers prices better than one dominated by a single large debtor (concentration risk) or by consumers. Your sector. Clean, non-contentious invoices such as recruitment, wholesale, manufacturing and haulage attract the widest appetite and the best advance rates. Sectors with stage payments, retentions or applications for payment, notably construction, are harder and often need a specialist funder. Dilution. If a lot of your invoices attract credit notes, disputes or contra-charges, lenders lower the advance rate to protect themselves. Turnover and facility size. Larger, cleaner ledgers unlock lower service fees and confidential discounting; smaller books tend toward disclosed factoring. Days to payment. Longer settlement terms mean the money is out longer, so the annualised cost rises even at the same headline fee. A tidy, diversified, quick-paying ledger is what earns a 90% advance and a fee at the bottom of the range.

Eligibility and how much you can actually raise

The defining feature of invoice finance is that the facility grows with your sales. There is no fixed loan amount; you can typically draw the advance rate against your live, unpaid invoices, so a business invoicing more each month simply has more available to draw. Facilities run from around fifty thousand pounds of turnover up to many millions, and because the funding is secured on the debtors, it is often reachable by companies that could not raise the equivalent as an unsecured loan. Lenders will want to see who you invoice and on what terms, so have ready an aged debtor report, a sample of invoices and any customer contracts, your recent management accounts and a few months of bank statements, and detail on your typical payment terms. They are assessing whether the invoices are clean, assignable and likely to be paid, and whether your customers are good for the money. Because we place the deal rather than lend, we match your ledger to funders whose appetite fits your sector, debtor spread and size, rather than firing one application at a single desk. Any figure before a formal offer is indicative; the advance rate, fee and facility are the lender's decision.

How we help you get a sharper rate

A handful of things genuinely move the price on an invoice finance facility, and our job as your broker is to line them up in your favour before a lender ever sees the deal.

We take it to the right lender first. The invoice finance market is crowded with bank-owned funders, independents and specialists, and each has a different appetite by sector, debtor spread and facility size, plus very different stances on construction, concentration and confidential terms. Approaching them one at a time is slow and leaves footprints. We hold that criteria detail across our panel, so we can focus your case on the funders most likely to give a high advance rate at a low fee, and present the ledger the way they underwrite it.

We structure the deal to price well. We will look at whether factoring or confidential discounting fits, whether whole-turnover beats selective for you, and how to frame concentration and dilution so they do not scare an underwriter. Small structuring choices often move the fee and the advance rate more than shopping around does.

We tell you straight what is realistic. We cannot promise a rate or an approval, because those sit with the lender, but we can give you an honest read on where your facility is likely to land and save you the hours a scattergun search would cost. It costs nothing to have us model it, and there is no obligation. Send us your aged debtor report and your numbers and we will come back with indicative terms from funders whose criteria fit.