Invoice Factoring Rates
Don’t pay too much for invoice factoring!
Having a good understanding of invoice factoring rates and fees will ensure the business owner is getting the best deal for your business. Invoice factoring rates can be as much as 4 times more expensive when comparing factoring companies. Shopping your factoring rates is a must.
Invoice factoring rates are a fee that has occured for the business to business financial transaction in which you sell your unpaid invoices to a factoring company for a small fee. This process gives the business owner a same day advance on the invoice for the small fee instead of waiting 30 to 60 days for the payment to arrive. Everyone knows that cash today is more valuable than cash next month so for many business owners getting this cash up front is worth paying a small invoice factoring fee.
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How Are Rates Determined
When invoice factors determine your invoice factoring rates they take into consideration just a few simple elements that determine their perceived risk level on the transaction.
- – Type of industry
- – Your customers credit worthiness
- – Monthly invoice volume and average dollar amount of your invoices
- – Character of the business owner
Average Invoice Factoring Rate
We recommend shopping for the best rate since many factors specialize in certain industries which can mean a lower rate. Rates generally range from 1.0% to 4% per 30 days with advances ranging from 80% to 99%. There are industries such as transportation and staffing that have higher advance rates on average. Also, the transportation sector often offers a flat rate option to most carriers.
Sample Invoice Factoring Rate Transaction
- Example bases on a 2% per 30 day rate and a 90% advance on the invoices
- Submit your $10,000 invoice to your factor on Monday
- Factoring company transfers $9,000 to your checking account on Tuesday (Next Day)
- Your factor waits 45 days for the payment to arrive
- After payment arrives your factor sends you $700