Invoice finance cost calculator

What this calculator does

Invoice finance lets you draw cash against money your customers already owe you, instead of waiting 30, 60 or 90 days for them to pay. This calculator turns the headline percentages a provider quotes into pounds you can actually plan around.

Enter the invoice value, the advance rate (the share paid to you up front), the service fee and the discount charge, plus how long the invoice stays outstanding. The tool returns three numbers that matter: the cash advanced on day one, the total fees you pay over the life of the invoice, and the net amount you keep once the customer settles. It also expresses the cost as an approximate annualised rate so you can compare it like-for-like against an overdraft or a business loan.

How to use it

Work from a real invoice or a typical one.

• Invoice value — the gross amount your customer owes, including VAT.
• Advance rate — the percentage released up front. 80–85% is common; the balance (a retention) is paid when the customer settles.
• Service fee — the provider's charge for running the facility, usually a percentage of invoice value or turnover.
• Discount charge — interest on the funds advanced, quoted per annum or per 30 days.
• Days outstanding — how long until your customer actually pays.

Change the days-outstanding figure to see how late payment quietly inflates the cost. A facility that looks cheap at 30 days can cost noticeably more if customers routinely drift to 75.

The formula in plain English

There are two cost layers, and the calculator adds them together.

Service fee = invoice value × service-fee rate. This is a flat charge for the facility and does not depend on how long the invoice runs.

Discount charge = advance amount × annual discount rate × (days outstanding ÷ 365). This is interest, so it accrues with time — the longer the customer takes, the more you pay.

Total cost = service fee + discount charge. Net proceeds = invoice value − total cost. The annualised cost is the total cost scaled up to a full year against the cash you actually had use of, which is why a 2% charge over 45 days can equate to a double-digit annual rate.

Worked example

Say you raise a £20,000 invoice (figures illustrative, not Credicorp rates).

Item	Figure
Invoice value	£20,000
Advance at 85%	£17,000 paid today
Service fee at 1.5%	£300
Discount at 9% a year for 45 days	≈ £189
Total cost	≈ £489
Net kept (of £20,000)	≈ £19,511

You unlocked £17,000 six weeks early for roughly £489 — about 2.4% of the invoice, or near 20% annualised on the advanced sum. Whether that is worth it depends on what the early cash earns or saves you, such as an early-settlement discount from a supplier.

How to read the result, and its limits

Use the net-kept figure to judge margin: if the cost eats more than the profit on the order, the facility is working against you. Use the annualised rate to compare invoice finance against other working-capital options on our loan comparison calculator.

The tool is an estimate. It does not model minimum fees, arrangement or audit charges, refactoring fees on late invoices, or the difference between disclosed factoring and confidential invoice discounting. It assumes the customer pays in full. For irregular or seasonal sales, pair it with our working capital calculator to see whether financing every invoice is necessary or only your peak-month ledger. This is educational, not financial advice.