Invoice Factoring Cost and Effective APR
Advance = invoice x advance%, fee = invoice x fee%, reserve = the rest, effective APR = (fee%/advance%) x (365/days). $2,000, 90% advance, 3% fee, 30 days -> $1,800 now, $140 reserve, 40.6% APR; paid in 15 days it annualizes to 81.1%. The factoring agreement governs.
Formula and source
advance = invoice x advance%; fee = invoice x fee%; reserve = invoice - advance - fee; APR = (fee%/advance%) x (365/days) x 100.
Invoice (freight) factoring cost and effective APR, from freight-factoring practice, by name.
Audience
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