Factoring Calculator

Factoring is when businesses transfer their receivables (invoices) to a factoring company at a discount. The business gets cash without waiting for maturity, and the factoring company collects from the debtor at maturity. It is an important financing tool for companies with cash flow difficulties.

Factoring is a transfer of receivables, not borrowing. It does not appear as a loan on the balance sheet and does not use your credit limit. It does not negatively affect credit score. Additionally, in factoring, the collection risk may transfer to the factoring company (non-recourse factoring).

Invoice maturity (longer term = higher cost), debtor's credit score, invoice amount, sector risk, and factoring type (recourse/non-recourse) affect costs. Non-recourse factoring is more expensive because the collection risk stays with the factoring company.