Invoice finance cost calculator
Estimate cash released and monthly cost of invoice finance, compared with an overdraft over the same period.
Estimated results
What these figures mean.
Invoice finance releases cash against unpaid invoices rather than waiting for customers to pay, and its cost is usually quoted as a fee on the invoice value for the period the money is outstanding, not as an annual percentage rate — which makes it hard to compare against an overdraft or line of credit at a glance. Enter your typical monthly invoicing, the advance rate the financier offers, how many days invoices typically stay outstanding, the financier's fee for that period, and an overdraft interest rate to compare against.
Cash released is the advance you would receive against a month's invoicing; the cost for this cycle scales the fee to the days outstanding you entered, and the equivalent overdraft figure translates an overdraft's annual rate to the same period, so the two costs sit side by side. Invoice finance is typically priced and assessed differently to a straightforward overdraft — the financier is largely relying on the strength and payment history of your customers rather than your own balance sheet, which is why it can be available to businesses that would not qualify for a conventional facility. This is a business-purpose facility only, arranged through non-bank lenders and specialist funds on our panel, and every arrangement is priced on the actual debtor book.
Invoice finance — questions we are asked.
Does invoice finance cost more than an overdraft?
Often the headline fee looks higher, but invoice finance scales with what you actually draw against invoices, and can be available where an overdraft is not — compare the two costs over the same period rather than the rate alone.
What is the difference between invoice finance and factoring?
The terms are often used interchangeably. The key distinctions are typically whether customers are notified, and whether the financier or you continue to manage collections.
Can I finance just one large invoice, or does it apply to my whole debtor book?
Both structures exist — selective (single invoice) and whole-of-ledger facilities are priced differently, and this calculator is a general guide to either.
What happens if a customer doesn't pay?
Terms vary by facility — some are with recourse to you if a debtor fails to pay, others are non-recourse. Confirm which applies before relying on the cash flow.