Start with the sentence most factoring quotes are designed to obscure: the fee is calculated on the face value of the invoice — never on the amount you are advanced. A 2% fee on a $25,000 invoice is $500 per 30 days whether the factor advances you 70% or 95% of it. Every worked example in the market runs on face value (Crestmont Capital’s framework and the worked examples across the SERP agree), and once you hold that one mechanic, the rest of the pricing system decodes quickly.
General information, not financial advice.
Factoring has no regulator-published rate card, so honest figures are attributed ranges, not statistics:
Flat. One percentage, regardless of how long the customer takes — FreightWaves’ example is 2.5% for up to 30 days. Simple, and it makes slow customers the factor’s problem instead of yours. Check what happens after the flat window closes; some “flat” deals convert to per-period pricing after 30 days.
Per-period / tiered. The fee steps up the longer the invoice stays unpaid. NetSuite’s canonical example: 2% for the first 30 days, then 0.5% per additional 10 days. Sage’s guide prices the same idea — the rate is quoted per period and accumulates.
Daily. A small percentage accrues per day outstanding. Sage’s worked contrast makes the shapes comparable at 42 days unpaid: a tiered structure lands at ≈2.5%, a daily structure at ≈2.1%. Daily pricing is the fairest shape for customers who pay mid-period — and the shape our calculator uses for its main result, with the whole-block alternative shown alongside.
Fee dollars (and % of face) if the customer pays at day 30, 60 or 90:
| Pricing shape | Pays day 30 | Pays day 60 | Pays day 90 |
|---|---|---|---|
| Flat 3% | $750 (3.0%) | $750 (3.0%) | $750 (3.0%) |
| 2% per 30 days | $500 (2.0%) | $1,000 (4.0%) | $1,500 (6.0%) |
| Tiered: 2% + 0.5% per extra 10 days | $500 (2.0%) | $875 (3.5%) | $1,250 (5.0%) |
Read the ladder column by column. At 30 days the per-period shapes win. At 90 days the flat fee wins by half — and the per-30-day deal has quietly become a 6%-of-face cost. Your customers’ actual payment speed is a pricing input, which is why a quote cannot be judged on the headline rate alone. Run your real invoice, at your customers’ real payment speed, through the invoice factoring calculator.
The discount fee is rarely the whole bill. The recurring extras, from FreightWaves’ cost inventory and NetSuite’s fee list:
None of these is automatically improper; all of them belong in your all-in total before you compare quotes. A 2% headline with $300/month of stacked add-ons loses to a clean 2.5% on most ledgers.
Five underwriting inputs set your rate: monthly factored volume (more volume, lower rate), your customers’ credit quality and payment history (the factor prices their risk, not yours), invoice size (small invoices cost more to service per dollar), industry risk (construction prices highest, trucking’s broker paper among the most standardised), and recourse vs non-recourse (the +0.5–1.5%/30-day premium above buys insolvency-only cover — the choosing guide runs the reality test on what “non-recourse” actually covers).
The two percentages in every quote do different jobs. The discount rate sets your cost. The advance rate sets your cash timing — how much arrives on day 1 versus at settlement. A higher advance is not a higher cost (the fee base is face value either way); it shrinks the reserve the fee is deducted from, which matters at the edges: on a small reserve with a slow-paying customer, fees can consume the entire reserve and leave a balance owed at settlement. Industry bands run 70–95% — trucking at the top (trucking page), construction at the bottom (construction page), staffing in between (staffing page). Compare quotes on the same invoice, all-in, with the calculator — then audit the contract with the choosing guide.
How much does invoice factoring cost? The fee typically runs 1–5% of the invoice’s face value per 30 days (LendingTree; Allianz Trade), with standard B2B invoices most commonly at 1.5–3.5% per month (Crestmont Capital) — plus add-on fees that NetSuite estimates can add 0.5–2% to the effective cost. Your real total depends mostly on how fast your customers pay: the ladder above shows one $25,000 invoice costing $500 to $1,500 under the same headline rate.
What is the difference between the discount rate and the advance rate? The question comes verbatim from invoicefactoringfast’s FAQ, and the distinction is the whole pricing system: the discount rate is the fee percentage — what the factor charges, on face value. The advance rate is the percentage of the invoice paid to you up front. One sets your cost; the other sets your cash timing. A quote that blurs them is a quote designed to confuse.
Why does factoring cost more the longer my customer takes to pay? Because most pricing is per-period: each additional 30 days (or 10-day tier) adds another slice of fee, per the tiered structures Sage and NetSuite document. The US Chamber CO draws the conclusion: at 60–90-day payment, factoring’s effective APR can reach 30–60%+. Flat-fee deals are the exception — there, the factor carries the delay risk instead.
What is a good factoring rate? Crestmont Capital’s framing is the honest anchor: for standard B2B invoices, 1.5–3.5% per month is the most common band, within a wider 1–5% market. Below-band quotes deserve add-on scrutiny rather than celebration; above-band quotes should be explainable by your industry, your customers’ credit or a non-recourse structure. Judge the all-in cost on your own invoice — calculator first, headline second.
Sources: LendingTree factoring roundup; Crestmont Capital (fee on face value; common band); NetSuite (tiered structure; add-on estimate); Sage factoring guide (tiered vs daily); FreightWaves cost of factoring (flat example; add-on inventory); Allianz Trade; US Chamber CO (effective APR); getcashpulse and startupowl roundups (non-recourse premium); invoicefactoringfast FAQ. Currency verified 2026-10-23.