Invoice Finance Calculator

Almost every invoice finance calculator online is run by a lender or a broker, and they all do the same small sum: invoice value, multiplied by a fee rate, multiplied by an advance rate. That tells you roughly what one invoice costs. It doesn't tell you the two things that actually catch businesses out.

The first is timing. Invoice finance pays you twice, not once: an advance now, then the rest of the invoice — the reserve — minus charges, whenever your customer finally pays. Those are two separate cash events, often two or three months apart, and your cash flow forecast is fiction unless it treats them separately.

The second is the recourse clock. Fund an invoice and you have a deadline: if your customer hasn't paid within the recourse period, that invoice drops out of your funding base. Your available funds shrink and nothing bounces, no letter arrives — the number in the lender's portal just goes down. The tracker tab here rebuilds that calculation from your own ledger so you can see it coming.

The two products are constantly confused, including by people using them. With factoring, you sell the invoice and the lender takes over credit control: your customer is told, and pays the factor directly. It's disclosed, and it suits smaller businesses who'd rather someone else chased.

With invoice discounting you borrow against the ledger instead. You keep credit control and your customer usually has no idea a lender is involved — that's why it's often called confidential invoice discounting. To secure it, the lender requires customer payments to go into a trust account: an account in your company's name, so it looks entirely normal on your invoice, but controlled by and charged to the lender. Money lands there, the lender sweeps it, nets off what you owe, and releases the surplus.

There's a middle option too, CHOCS — Customer Handles Own Collections — where the arrangement is disclosed but you still do the chasing.

The practical consequence: if you're on discounting, chasing late payers is your job, and no one will warn you when an invoice is about to age out of the funding base. That's the gap this tool fills.

UK facilities usually have two charges, which is why comparing them against a single headline percentage is so misleading.

The service fee (or administration fee) is a percentage of the invoice value, typically between 0.5% and 3% depending on turnover, sector and whether the lender is doing your credit control. It's charged on everything that goes through the facility, whether or not you draw the money.

The discount charge is interest on the money you've actually drawn, quoted as a margin over base rate and accruing daily. Two facilities with the same service fee can differ a lot here, especially if your customers are slow, because you pay for every extra day the advance is outstanding.

Then there are the extras that never appear in the headline rate: arrangement or set-up fees, CHAPS and same-day payment charges, audit or survey fees, and refactoring charges on invoices that go past their recourse date. Switch the calculator to the two-part option to model this properly, and put your CHAPS charge in the fixed-charges box — on a small invoice it can matter more than the rate.

A 1.5% fee sounds cheap next to an overdraft at 9.5% a year. They aren't comparable, because the 1.5% buys you about 60 days of money and the 9.5% buys you a year of it.

To compare them, annualise. Take the total charges, divide by the cash you actually received, then scale by 365 divided by the days the money was outstanding. Financing a £50,000 invoice for £1,500 in charges with a £42,500 advance over 60 days is a 3% cost of that invoice — but about 21% a year. That is the figure to hold next to your overdraft rate.

This isn't an argument against invoice finance. It's frequently the right call: it scales with your sales, it doesn't need the security a term loan needs, and being able to pay staff this month is worth real money. But you should know which number you're comparing, and the calculator shows both.

The recourse period is the window your customer has to pay before the invoice stops being funded. Expect 60 to 120 days, with 90 common, and check whether your agreement counts from the invoice date, the due date or month end — on 60-day terms those conventions can be two months apart. Set the tracker to match the wording, not the convention you assume.

When the period expires the invoice becomes disapproved: your availability falls by the invoice value times your advance rate, and on a recourse facility the advance is recovered, usually netted against your next drawdown.

The useful local lever is the EU Late Payment Directive, which Malta implements: for business-to-business contracts the default payment period is 30 days, extendable by agreement to a maximum of 60 days unless expressly agreed otherwise and not grossly unfair, and you are entitled to statutory interest at the European Central Bank reference rate plus at least eight percentage points, plus a fixed compensation amount for recovery costs. A customer sitting on 90 or 120 days is therefore both a cash-flow risk and outside the default regime, which gives you a concrete argument precisely when the invoice is approaching its recourse date.

The availability figure in your lender's portal isn't your ledger times the advance rate, which is why it so often reads lower than expected. It's a sequence of deductions, and the order matters:

Start with the outstanding invoices you've assigned to the facility. Take out the disapprovals — anything past the recourse period, in dispute, and depending on your agreement, overseas debtors, related-party invoices, or customers over their credit limit. What's left is your eligible ledger.

Now apply the concentration limit. Most facilities cap how much of the funding base any single customer can represent — 25% to 50% is typical. If your eligible ledger is £100,000 with a 50% cap and one customer owes £60,000, then £10,000 of that customer's debt is excluded. The cap is applied to the ledger after disapprovals, not before, so an aged invoice elsewhere can quietly tighten the cap on your biggest customer.

Multiply what survives by your advance rate for gross availability, cap it at your facility limit, then subtract funds in use — what you've already drawn. That's what you can actually take today. The tracker shows every line of this with the reason attached, which is the part the client statement leaves you to work out yourself.

There's no bank feed and no lender integration here, and that's deliberate — for invoice discounting, a bank feed wouldn't help. Your customers pay into the trust account, not your current account, so your bank statement shows lender sweeps and releases in lump sums that don't correspond to individual invoices. The datasets that answer the real questions are your invoice ledger and one figure off your lender statement.

So: set your facility terms once from your agreement, import your outstanding invoices from a Xero, QuickBooks or Sage CSV export (upload it and pick which column is which), and type in your current funds in use. Mark invoices paid as they settle. That takes a few minutes a week and gives you the availability figure, the recourse deadlines and the forward cash curve.

It also learns. Once you've marked a few invoices paid, the tool works out each customer's real average time to pay and uses that for the forecast instead of your agreed terms — so a customer who reliably pays at day 75 on 60-day terms is forecast at 75. Everything is stored in this browser only; use the backup button to move it to another machine.