In essence, anything an organization could do if it had the money tied up in customer invoices on hand, instead of on the books, are the opportunity cost to the organization of not factoring invoices. Inadequate cash flow for payroll or operating expenses.Inability to take advantage of vendor cash or quick-pay discounts.Inability to take on new business, serve large customers or fill big orders.These types of opportunities lost due to slow cash flow could come in many forms: Any opportunity that an organization cannot take advantage of while waiting on this working capital are the opportunities “lost” to the business. It’s commonly referred to as an opportunity cost calculator. The reserve – the difference between the invoice amount less the advance and factoring fee – any amount that remains is held in reserve against customer payment before being returned to the factoring client.The factoring fee – based on the factoring rate (e.g., 5% factoring fee) – the cost of financing.The advance amount – based on the advance rate (e.g., 90% advance rate) – the amount advanced to the client when they factor an invoice.Average invoice amount – this is the amount of a single, typical customer invoice.

The invoice factoring calculator (or opportunity cost calculator) shows four main figures: An invoice factoring calculator (also known as an opportunity cost calculator) reveals the amount of working capital currently tied up in an organization’s accounts receivable invoices that could be available to the organization immediately if they factored the invoices instead of waiting on customer payments.

Invoice factoring costs