Invoice Factoring Fees: The Complete Cost Anatomy
The discount rate is the number they advertise. It is rarely the number that decides what factoring costs you.
Two factors quote you 2%. One of them ends up costing nearly twice the other. Here is where the difference hides.
1. The discount rate, and the period it covers
A rate is meaningless without its period. "2%" can mean 2% per 30 days, 2% per 15 days, or 2% for the first 30 days and then an increment for each additional period. Always ask: 2% per what, and what happens on day 31, 45 and 60? Tiered structures are common and are where slow-paying customers get expensive.
2. The advance rate
If a factor advances 90% and holds 10% in reserve, that reserve is your money sitting in their account until your customer pays. On $100,000 of monthly invoicing that is $10,000 of permanently unavailable working capital. A higher advance at a slightly higher rate is frequently the better deal, and almost nobody models it that way.
3. The add-ons
- ACH or wire fee — per transfer. Small individually, meaningful at volume.
- Same-day funding surcharge — the advertised speed sometimes costs extra.
- Monthly minimum — you pay the fee whether or not you factor that month.
- Credit check fees — per new customer approved.
- Lockbox or account maintenance fee — monthly, regardless of activity.
- Application and due-diligence fees — charged up front, often non-refundable.
- Unused-line fee — charged on the facility you did not draw.
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4. The exit cost
This is the one that traps people. Check three clauses before signing:
- Term length and auto-renewal. Many agreements renew automatically unless cancelled inside a narrow notice window.
- Termination notice period. 30, 60 or 90 days is typical. Miss it and you are in for another full term.
- Early termination fee. Sometimes a flat sum, sometimes the remaining minimums for the whole term.
- UCC release timing. Until the factor releases the UCC-1, no other lender can take a first position on your receivables. Slow releases block your next facility.
How to leave a factoring company without getting stuck →
Comparing two quotes properly
Model a realistic month, not a single invoice. Take your actual monthly invoice volume, your customers' actual average days-to-pay, and run both quotes through it including minimums and per-transfer fees. The calculator does this →
Why some numbers on this site are blank
Every other factoring comparison site fills its rate columns. Most of those numbers are the advertised teaser rate, republished without checking what a real small operator is quoted. We publish a figure only when we have a primary source: the company's own published page, or a quote we obtained ourselves. Where we do not have one, the cell says Not published. That gap is honest and it closes edition by edition.