Invoice Finance Cost Calculator

How much does invoice finance cost?

Invoice finance costs consist of two main charges: a service fee (typically 0.5% to 3% of your annual turnover) and a discount charge (interest on the cash advanced, usually 2% to 5% over Bank of England base rate). The exact cost depends on your sector, turnover, customer creditworthiness, and which type of finance you choose.

Factoring (where the provider manages collections) is typically more expensive than discounting (where you keep control). Spot or selective factoring — where you choose individual invoices to finance rather than committing your whole ledger — offers flexibility but costs more per invoice financed.

How this calculator works

The calculator estimates your annual costs based on your turnover, typical invoice value, number of invoices per month, and sector. It uses indicative market rates for service fees and discount charges, adjusted for your chosen finance type (factoring, discounting, or spot).

The advance rate (the percentage of invoice value you receive upfront) varies by sector. Construction businesses typically receive 70-80% advances due to higher risk and longer payment terms, while recruitment and professional services can see 80-90% advances.

What affects the cost?

Your sector: Higher-risk sectors like construction face higher fees. Lower-risk sectors like recruitment typically get better rates.

Turnover: Larger businesses often negotiate lower percentage fees, though the absolute cost is higher.

Customer creditworthiness: If your customers are established businesses with good payment records, you'll get better terms. Public sector clients often qualify for the best rates.

Finance type: Invoice discounting is cheaper than factoring but requires you to chase customers for payment yourself. Spot factoring is more expensive but gives you flexibility.