Invoice Factoring Costs

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How your fee for accounts receivable invoice factoring is determined:

The creditworthiness of your customers

With accounts receivable invoice factoring your firms credit is of secondary importance.  The rate you will pay depends much more on your customer’s credit than on yours.  In general the better your customer’s credit the more you will be advanced up-front and the lower the invoice factoring fee will be.

Average size of your invoices

With accounts receivable invoice factoring there are certain costs involved in the set up and the ongoing invoice factoring process.  These costs involve; determining the creditworthiness of your customers, determining the ability of your customers to pay and the verification of the invoices.  These costs do not vary regardless of the size of the invoice.  Therefore, in general, a company generating larger invoices will pay a smaller fee than one generating smaller invoices.

Total invoice amount factored

The costs mentioned above also apply to the total amount factored.  In general, the more invoices factored and the larger they are the less your firm will be charges.

The industry that your company is in

In the accounts receivable invoice factoring business history has taught us that certain industries are riskier than others when it comes to collecting invoices.  Therefore, the riskier payment history your industry has the lower will be your up-front percentage and larger will be your fee.