> Marketplace disclaimer: Loanable is a commercial funding marketplace, not a lender or a factoring company. Funding partners underwrite applications and set pricing. Advance rates, fees, terms, and timelines vary by partner. Every number on this page is an illustrative example, not a quote, an offer, or Loanable pricing. This article is educational, not tax, legal, or accounting advice.
By the Loanable Editorial Team · Marketplace editorial · Updated October 2026
Invoice factoring rates are rarely one number. A factoring quote is really three numbers working together: the advance rate, the factor fee, and the reserve. Add the smaller fees around them, and two quotes with the same headline rate can cost very different amounts. This guide shows how factoring is priced, which fees to look for, and how to run the math on your own invoices. If you're still deciding whether factoring fits, start with our invoice factoring page.
Invoice factoring rates at a glance
Every factoring deal comes down to three numbers:
- Advance rate: The share of the invoice's face value you get up front.
- Factor fee (or discount rate): What the factor charges, usually a percentage of the invoice's face value for a set period of time.
- Reserve: The part of the invoice held back until your customer pays. The reserve, minus fees, comes back to you at the end.
The short answer: the advance rate controls how much cash you get now. The factor fee, and any add-on fees, control what it costs. Partners set all three based on your customers, your invoices, and your volume. Loanable does not publish one rate, because there isn't one.
Quick recap: you sell an unpaid invoice, get most of its value up front, and the factor collects from your customer. For the step-by-step, read how invoice factoring works.
How factoring fees are quoted
Factors quote fees in a few common ways. Ask which one applies before comparing anything.
- Flat fee: One percentage of face value, no matter when the customer pays within an agreed window.
- Per period: A percentage charged for each period the invoice stays open, such as every 30 days.
- Tiered: A base fee for the first period, then extra fees for each additional block of days, often 10 or 15 days at a time.
One detail matters more than most owners expect. The fee is usually charged on the invoice's face value, not on the cash you received. If you're advanced 85% of an invoice and charged a fee on 100% of it, your cost per dollar you actually used is higher than the headline rate.
Advance rate and reserve: why they change your real cost
A higher advance rate means more cash, not always a cheaper deal.
Illustrative comparison, one $10,000 invoice paid in 30 days (not quotes):
- Quote A: 90% advance ($9,000 up front), 2.5% fee on face value ($250). Cost per dollar advanced: about 2.8%.
- Quote B: 80% advance ($8,000 up front), 2.0% fee on face value ($200). Cost per dollar advanced: 2.5%.
Quote B costs less per dollar used. Quote A gives you $1,000 more cash on day one. Which one is better depends on whether you need the extra cash or the lower cost.
The reserve is your money, but you don't have it until the customer pays. Ask when it's released and what can be deducted from it.
The fees beyond the factor rate
These line items can change the total cost. Not every partner charges them, and names vary.
- Application or setup fee: A one-time charge to open the account.
- Due diligence or UCC search fee: Covers checking your business and filing a lien. Factors often file a UCC-1 financing statement on your receivables. Cornell's UCC Article 9 text covers how these liens work.
- Wire or ACH fees: Charged per funding transfer.
- Lockbox or processing fees: For handling customer payments.
- Monthly minimums or volume commitments: You may pay a fee if you factor less than an agreed amount.
- Invoice aging surcharges: Extra charges once an invoice passes a set age.
- Early termination fee: A charge for leaving the contract before its end date.
Ask for the full fee schedule in writing. A low factor fee with a high monthly minimum can cost more than a higher fee with no minimum.
What drives factoring rates up or down
Factoring partners price risk, mainly the risk that your customer won't pay. Common factors include:
- Your customers' credit. The account debtor's payment history often matters more than your own credit.
- Invoice volume. Higher, steadier volume can earn better pricing.
- Payment terms and days sales outstanding (DSO). Net-30 customers who pay on time cost less to factor than slow net-60 or net-90 payers.
- Industry dispute risk. Industries with frequent disputes, returns, or progress billing can price higher.
- Customer concentration. If one customer makes up most of your invoices, the partner carries more risk.
- Recourse vs non-recourse. Who absorbs the loss if a customer doesn't pay. More on this below.
- Spot vs whole-ledger. Factoring a single invoice now and then is often priced differently from factoring all your invoices under a contract.
These are common pricing levers, not approval criteria.
Recourse vs non-recourse: the price difference
With recourse factoring, you buy back or replace an invoice if your customer doesn't pay. With non-recourse factoring, the factor absorbs certain losses, so it usually costs more.
Non-recourse often covers only a customer's insolvency, such as bankruptcy, not disputes or slow payment. For the full explanation, see the recourse section in how invoice factoring works.
Turning a factor fee into an APR-equivalent (and when that misleads)
Annualizing the cost is one way to compare factoring with a loan. This is an educational comparison, not an APR disclosure or Loanable pricing.
Illustrative math: a cost of 2% of the cash advanced for 30 days works out to roughly 24% if you annualize it (2% × 365 ÷ 30).
That comparison can mislead in both directions:
- Fast payers can make it look worse. If you pay a full 30-day fee and the customer pays in 15 days, the annualized figure roughly doubles, even though your dollar cost didn't change.
- Slow payers raise the dollar cost. Each extra period adds another fee. Tiered pricing can also make later days more expensive than the first.
Use it as one input, then compare total dollars on your real invoices.
Worked example: one $50,000 invoice, start to finish
Illustrative only. These are not quotes, typical rates, or Loanable offers.
Assumptions: a $50,000 invoice, an 85% advance, a fee of 1.5% of face value per 30 days, and $100 in transfer and processing fees.
If the customer pays in 30 days:
- Advance on day one: $42,500
- Reserve held: $7,500
- Factor fee (one 30-day period): $750
- Other fees: $100
- Reserve released after payment: $7,500 − $750 − $100 = $6,650
- Total you receive: $49,150
- Total cost: $850
If the customer pays in 60 days:
- Advance on day one: $42,500
- Factor fee (two 30-day periods): $1,500
- Other fees: $100
- Reserve released: $5,900
- Total you receive: $48,400
- Total cost: $1,600
The same invoice cost nearly twice as much because the customer paid a month later. That's why your customers' payment habits matter as much as the quoted rate. To model other scenarios, try our loan calculators.
Factoring cost vs other working-capital options
Each option has a different cost shape. This is a quick orientation, not a full comparison.
- Business line of credit: Interest on what you draw, often with draw or maintenance fees. Usually needs stronger credit and financials. For a head-to-head, read factoring vs a business line of credit.
- Short-term business loans: A lump sum with a fixed payment schedule. Cost depends on rate, fees, and term. See our term loans page for longer terms.
- Merchant cash advance: Priced with a factor rate on future sales, not on invoices. Read merchant cash advance rates for how that pricing works.
- SBA loans: Often lower cost and longer terms for eligible businesses, but slower and more paperwork-heavy. SBA 7(a) loans go up to $5 million.
Our working capital hub lays out these options together. The SBA's loans overview is also a useful neutral starting point.
How to compare factoring quotes
Use the same checklist for every offer:
- Get the full fee schedule in writing. Include every fee, not just the factor rate.
- Confirm what the fee is charged on. Face value or the advanced amount.
- Model 12 months at your real volume. Use your actual invoice sizes and how fast your customers really pay.
- Check minimums and termination terms. Know the contract length and the cost of leaving early.
- Ask about notification. Will your customers know you factor, and will they pay the factor directly?
- Ask how the reserve is released. Per invoice or in batches, and what can be deducted.
- Clarify recourse. Exactly which losses are covered, if any.
Loanable is not the factor or the lender. You fill out one application, funding partners in our network review it, and they set their own pricing. You compare offers and choose what fits, or choose none. Learn more on how it works.
Frequently asked questions
What is a typical invoice factoring rate?
There is no single typical rate. Pricing depends on your customers' credit, your invoice volume, how fast customers pay, and the contract type. Ask partners to quote on your actual invoices and compare the total cost.
How is a factoring fee calculated?
Most factors charge a percentage of the invoice's face value for a set period, such as every 30 days. The fee may be flat, per period, or tiered. Other fees, like wires or monthly minimums, can be added on top.
What is a good advance rate?
A higher advance rate gives you more cash up front, but it isn't automatically better. Compare the cost per dollar advanced and when the reserve comes back to you.
Is non-recourse factoring more expensive?
Usually, yes, because the factor takes on more risk. Check the definition closely. Non-recourse often covers only customer insolvency, not disputes or slow payment.
Are there hidden fees in factoring?
They shouldn't be hidden, but they're easy to miss. Look for setup, due diligence, wire, lockbox, monthly minimum, aging, and early termination fees. Ask for the full fee schedule in writing.
Is factoring cheaper than a merchant cash advance?
It depends on the offers and how fast your customers pay. Factoring is priced on invoices. A merchant cash advance is priced on future sales. Compare the total dollars you would pay for the same amount of cash.
Can I factor just one invoice?
Some partners offer spot factoring for a single invoice. It's often priced differently from a whole-ledger contract.
Compare factoring offers in one place
Invoice factoring rates only make sense when you see the whole picture: advance rate, fee, reserve, and the fees around them. Run the math on your own invoices before you sign. When you're ready, apply once to see what funding partners can offer, or learn more about accounts receivable financing.