Accounts receivable factoring Business. How Fees Are Computed

Gross invoice $10,000

80% = 8,000 advance

30 days = 3% = $300

20,000

80% = 16,000 advance

45 days = 4% = $800

A  factoring receivables company tracks each invoice
individually to compute the  fee. The receivable funding company has one program
that applies the fees to each specific invoice
 founded using turn, and a different program
that charges a daily rate against the average daily balance.

This is similar to how credit card companies charge interest.
 A receivable funding business firm’s typical daily rate is 1/10 of 1% per calendar day.
If the account receivables loan business  used the daily rate
to compute the above 2 invoices it would average (weighted by dollar grand total)
which would be approx. 4% for each (30+45=75/2=37.5 then weighted by dollar sum.)

Every business factoring firm calculates its fees differently.
 Most all of them base fees on the gross invoice
 tally (not net) and we do not settle interest
using reserve balances.
 All receivables factoring company’s vary using how they handle
 reserve releases as well. A invoice discounting company
 largely holds 10% in reserve and advances 90% to the client.
The fees come out of the reserve.

The 1st week of each month the receivables loan business adjusts the reserve;
then applies fees for the previous month and predicated
using the previous month’s collections.
The  factoring accounts receivable firm cuts a check to our clients
 for any monies in the reserve over 10%, i.e.
they originate the new month with 10% of the gross
invoices outstanding in the reserve.

This is how the  factoring invoices firm calculates the
 reserve releases for clients on the daily rate fee structure.
Clients taking a fee per invoice (calculated individually dependent taking
the specific number of days it took that invoice to pay off) works like this:
 8,000 advance (10,000 x .8 )
+ 2,000 reserve
   -  300 fee
————-

$1,700 reserve release 1st of month after collected

Some clients have no reserve

10,000 x 95% = 9,500

$500 fee

The receivable factoring company also offer rebates
 if clients factor a certain dollar whole amount in the
 month or if the average invoice turn is less than a certain number of days.

Here’s a rebate example:

Flat 4% fee

90% advance

.5 rebate volume > $100 K / mo

1.0 rebate volume > $200 K / mo

.5 rebate average turn 40 days or less

Why Businesses Choose Us Again and Again for their invoice factoring
We provide businesses nationwide with hundreds of millions of dollars annually.
We have been providing invoice factoring services nationwide for decades and have clients in hundreds of industries. Including factoring for Health Care Staffing
please click here for More Reasons To Choose Our Services.

This entry was posted on Thursday, June 14th, 2007 at 3:07 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.