Comparison of Factoring Fees and Charges

The costs for invoice factoring are made up of discount fees and administrative charges. But watch out!

It’s a competitive business and some factoring companies advertise super low discount rates to lure in accounts receivable funding clients and hit them with hidden fees later.

Want to know the true factoring charges before signing on the dotted line? Use this chart for an accurate factoring fees comparison.

Factoring Company Comparison Chart

Factoring Services

  • Funding Amount Available
  • Advance Rate
  • Discount fee (Percentage charged per number of days)
  • Minimum Discount per invoice
  • Recourse or Non-recourse Factoring
  • Personal Guarantee
  • Validity Guarantee

Setup Fees:

  • Application Fee
  • Origination Fee
  • Due Diligence Fees
  • UCC / Filing Fees
  • Documentation Fees
  • Attorney Fees

Ongoing Charges and Minimums:

  • Minimum monthly invoice volume
  • Minimum monthly funding fee
  • Administrative Fees
  • Facility Fee
  • Monthly Lockbox Fee
  • Credit Check Fee
  • Monthly lien searches

Funds Transfer Charges:

  • ACH fee (electronic funds transfer) – 2nd day
  • Wire transfer fee – same day
  • Overnight check fee

Other Charges:

  • Same day funding
  • Minimum factor fees (over life of account)
  • Inactivity fee (if no activity for certain number of days)
  • Early termination fee
  • Forwarding fee to send money to a new factor
  • Missing notation fee (factor notation on invoice)
  • Check conversion penalty
  • Processing Fee for invoices not factored
  • Other Fees (What, there’s more?)

General Practices:

  • Time for new account setup
  • Time for new customer credit approval
  • Frequency of rebate payments
  • Float (number of days for customer checks to clear)
  • Spot factoring availability
  • Length of contract
  • Automatically renewing contract

Copy this chart into a spreadsheet and use it to compare quotes for factoring services and charges. A few simple questions today could save thousands in dollars and surprises!

If you’re searching for reputable factoring services be sure to grab a copy of the 2013 Factoring Company Directory in the bookstore.

Source: Chart adapted from comment posted by Jeff Callender of Dash Point Financial sharing how his company spells out costs.

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