Forfaiting · Factoring

Forfaiting and factoring cost calculator

See what the receivable actually nets after the discount.

Factoring and forfaiting trade time for money, and the headline discount rate hides the real cost: the admin fee and the FX leg can double the effective cost on a small or short-dated receivable. Sign on the rate alone and the net proceeds land lower than the cash-flow gap the financing was meant to close.

Type the receivable, the discount rate, the days, the admin fee, and the FX cost, and the tool returns net proceeds so you compare offers on what actually hits the account.

Last updated 2026-05-09. Math runs in your browser, no data leaves your computer.

The face value of the invoice you want to turn into cash now.

Days from today until the buyer's payment falls due. The discount is charged across this window.

The factor's annualised discount rate. Recourse lines run lower; non-recourse adds 1 to 3 points for the credit-risk transfer.

The factor's flat handling fee as a percent of the receivable. Take it from the factor's quote.

Only if the receivable and your settlement currency differ. A USD settlement on a EUR receivable adds 0.3 to 1%.

The day-count convention the factor uses. 360 is the US and Eurodollar standard; 365 is common in UK and Chinese banking.

General guidance only. Verify against the cited primary sources before you commit to a shipment, declaration, or contract.

When forfaiting and factoring pay back

Both products turn a future receivable into present cash at a cost. The seller takes a discount; the factor or forfaiter takes the time-value-of-money plus a credit-risk premium plus a small admin margin. The right answer depends on the seller cost of capital. If your treasury rate is 6% and the factor offers 9.5% on OA 60, factoring costs you 3.5% per annum. For a 60-day OA that is 0.58% of the receivable; cheaper than holding the receivable open if you have alternative uses for the cash that yield more than 9.5% annualised (which most operating businesses do).

Non-recourse factoring or forfaiting transfers credit risk. The seller pays a higher discount rate (1 to 3 percentage points more than recourse) but stops worrying about buyer default. For first-time buyers or markets with weak creditor protections, the credit-risk transfer is often worth the premium.

FX cost matters when the receivable is in one currency and the seller settles in another. Factor settlement in USD when the receivable is in EUR adds 0.3 to 1% FX margin. The tool exposes this as a separate line; replace with your factor actual quote.

A worked example

The booking. You hold a 35,500 USD receivable on OA 90 and a factor offers to advance it now at 9.5% with a 0.3% admin fee. The headline rate sounds close to your 6% cost of capital, so it looks marginal.

The failure. Read only the headline and you misprice it. The 9.5% is annualised, but you also pay the 0.3% admin and any FX margin, and on a 90-day receivable the all-in cost is about 2.3% of face, an effective annualised rate near 11.5%, not 9.5%. Treat the rate as the whole cost and the deal looks cheaper than it is.

The fix. Run every fee through the tool: discount, admin, FX. If the net proceeds, freed up 90 days early, can earn more than the 2.3% all-in cost in your business, factor it; if not, hold the receivable. The decision turns on the all-in number, not the quoted rate.

Deciding whether to offer the open-account term in the first place? The payment term cost calculator prices it at /tools/finance-and-payment/payment-term-cost-calculator.

Financing against an LC instead of an open account? The LC terms decoder explains the clauses at /tools/finance-and-payment/lc-terms-decoder-rule-based.

Frequently asked

What is the difference between forfaiting and factoring?

Forfaiting: non-recourse purchase of an LC-backed receivable by a forfaiter. Seller gets cash now; the forfaiter takes the credit risk on the LC issuing bank. Used for medium-to-long-term receivables (60 to 720 days). Industry-standard for LC 60 / LC 90 / LC 180 transactions where the seller wants immediate cash.

And factoring?

Factoring: discount of an open-account receivable by a factor. Recourse (seller still bears credit risk if buyer defaults) or non-recourse (factor takes the risk at a higher fee). Typical for OA 30, OA 60, OA 90 receivables. Cheaper than forfaiting but with more strings (assignment of receivables, monitoring).

How does the discount math work?

Discount rate (annualised) times days to maturity divided by 360 or 365 days = discount cost. Receivable USD x discount rate x days / 360 = discount fee. Plus an admin fee (usually 0.1 to 0.5% flat) and an FX fee if currencies cross.

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