How are Factoring Fees Determined?

Invoice factoring fees can vary between 2 1/2% and upwards of 4 1/2% per month, depending on several variables. The difference can result in fee expenses of thousands of dollars to the average factoring client. The type of receivables you choose to factor and the companies you sell to are important in the overall rate that is charged.

Factoring companies place a great deal of importance on the credit standing of your customers. If Walmart is one of your customers, underwriting will look very favorably on funding those invoices (even though they are habitually slow payers). On the other hand, a company that is financially shady will cause the rate to go up.

Other factors that are involved in determining fees are total volume per month, average amount of invoice, and number of invoices to be factored each month. It might behoove you to not factor those invoices that are to poor credit risk companies or those that are comprised of several small invoices each month.