Factoring Rate

A factoring rate is a scale used by factoring firms that buy commercial invoices at a discounted price.

The factoring rate is the percentage rate of the discount, usually based on your customers’ credit strength, and the value and volume of the invoices you wish to factor.

  • Receive advances between 95% and 100%
  • Find your factoring rate quote fast
  • Fund your business immediately
  • Improve your cash flow within days

Most factoring rates average from less than 1% to 5%, depending on certain variables. Factoring rates are quoted as a percentage of the invoice amount, rather than an annual percentage rate. Since the factoring company cannot determine how long it may take to receive payment on a factored invoice, an annual percentage rate cannot be determined in advance. With a flat factoring rate, the equivalent “annual percentage rate” decreases the longer it takes for the factoring company to receive payment from your customer.

Generally, the factoring company will pay you anywhere between 95% and 100% of your invoice amount, minus a corresponding discount fee. The factoring rate depends on your business, your customers’ payment history, and the dollar amount of your anticipated invoices. Factoring rates vary just as interest rates do, but unlike borrowing from a bank, you incur no debt when you factor. Instead you receive payment upfront for completed work rather than waiting 30, 60, or even 90 days for customers to pay you.

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