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Invoice Discounting Cost Calculator

Work out invoice discounting cost instantly with clear inputs, formula shown and shareable results.

About Invoice Discounting Cost Calculator

Invoice discounting advances a share of an approved receivable and charges interest for the days until the customer pays. The retained margin covers dilution and disputes, and is released when the invoice settles in full.

Formula

Discounting charge

Charge = advance × rate × days/365; Net = advance - charge

Worked example

With the default values below, Invoice Discounting Cost Calculator returns Cash Received Today of $782,904.11. Change any input above and every figure here is recalculated in your browser.

Inputs used

Invoice Valueminimum 0
1,000,000
Advance Rateaccepts 30–95 %
80 %
Annual Discount Rateaccepts 0–100 %
13 %
Days To Maturityaccepts 1–270
60

Results

Cash Received Today
$782,904.11
Gross Advance
$800,000.00
Discount Charge
$17,095.89
Annualised Cost Of Funds
13.000%

Step by step

  1. 1Values used
  2. 2Discounting charge
  3. 3Cash Received Today= 782,904.11
  4. 4Gross Advance= 800,000.00
  5. 5Discount Charge= 17,095.89
  6. 6Annualised Cost Of Funds= 13.000

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.

Frequently Asked Questions

Is this cheaper than an overdraft?

Often comparable on rate, but it scales with sales and does not require additional collateral beyond the receivables.

What if the customer does not pay?

Under recourse facilities you must repay the advance; non-recourse factoring transfers that risk at a higher price.

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