Invoice finance calculator

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 R100,000 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:

(R100,000 x 0.8) – (R100,000 x 0.03 x 3) = R77,000

This means that the finance company would pay you R80,000 upfront, but would deduct R3,000 in fees for the 90-day period, leaving you with a total payment of R77,000.