Invoice finance calculator

Use our handy invoice finance calculator to get an understanding of how much you could release from invoices owed to you.

Ciaran Burke

Page written by AI. Reviewed by Ciaran Burke on January 10, 2024.

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* Will be paid to you when your client has paid the invoice in full and within the agreed invoice term.

This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.

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How do you calculate invoice finance payments?

Invoice finance is a type of financing where a business sells its outstanding invoices to a finance company in exchange for immediate payment. The finance company will typically pay a percentage of the value of the invoices upfront and then collect payment from the customers directly. The finance company will charge a fee for this service, which is typically calculated as a percentage of the value of the invoices.

To calculate invoice finance payments, you will need to consider the following factors:

  1. Invoice value: The total value of the invoices being financed.

  2. Advance rate: The percentage of the invoice value that the finance company will pay upfront. This is typically between 70% and 90% of the invoice value.

  3. Discount rate: The fee charged by the finance company for providing the invoice finance service. This is typically between 1% and 5% of the invoice value per month.

  4. Repayment term: The length of time over which the finance company will collect payment from the customers.

To calculate the invoice finance payments, you can use the following formula:

(Invoice value x advance rate) – (Invoice value x discount rate x repayment term)

For example, if you have £100,000 worth of invoices and the finance company is offering an advance rate of 80% and a discount rate of 3% per month for a repayment term of 90 days, the calculation would be:

(£100,000 x 0.8) – (£100,000 x 0.03 x 3) = £77,000

This means that the finance company would pay you £80,000 upfront, but would deduct £3,000 in fees for the 90-day period, leaving you with a total payment of £77,000.

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