Invoice Finance Calculator
Estimate your monthly cost of giving credit — based on your facility's utilisation, debtor days and fees
Quick answer: Invoice finance in Australia is typically priced as a fixed monthly facility fee plus interest that accrues daily on the funds you draw down — not a one-off percentage fee per invoice. For example, a business invoicing $750,000 a month, drawing 60% utilisation, with customers paying in 30 days on average, at a 9.95% annual interest rate and a $3,000 monthly facility fee, pays roughly $6,680 per month in total financing cost — about 0.89% of monthly revenue. Use the calculator below to model your own numbers.
| Item | Amount | % of revenue |
|---|---|---|
| Total Funds Advanced | — | — |
| Monthly Facility Fee | — | — |
| Interest Charged on Advanced Funds | — | — |
| Cost of Giving Credit | — | — |
How this calculator works
This calculator models a revolving invoice finance facility — the kind used to fund your whole debtor ledger on an ongoing basis, not a single invoice at a time. It works through four steps, and every figure updates live as you adjust the inputs. All calculations happen in your browser; nothing you enter is sent anywhere.
- Total Funds Advanced = Monthly Revenue × Average Utilisation — how much of your debtor ledger is actually drawn down against the facility at any time.
- Interest Charged = Total Funds Advanced × (Annual Interest Rate ÷ 365) × Average Debtor Days Outstanding (DSO) — interest accrues daily for as long as the funds are outstanding, so slower-paying customers cost more to fund.
- Debtor Protection Fee (optional) = Monthly Revenue × Debtor Protection Cost — an optional charge for bad-debt / credit protection.
- Cost of Giving Credit = Monthly Facility Fee + Interest Charged + Debtor Protection Fee.
Key terms explained
- Monthly Revenue
- The average value of invoices you issue each month — the debtor ledger being financed.
- Average Utilisation
- The average percentage of that revenue drawn down against your facility at any time. Most businesses don't draw 100% of their limit continuously.
- Average Debtor Days Outstanding (DSO)
- The average number of days your customers take to pay an invoice. A higher DSO means funds are outstanding for longer, so interest accrues for longer.
- Monthly Facility Fee
- A fixed dollar fee charged for maintaining the facility, independent of how much you draw down in a given month.
- Annual Interest Rate
- The yearly interest rate charged on the funds you have drawn down, applied daily against the balance outstanding.
- Debtor Protection Cost
- An optional fee, charged as a percentage of revenue, for protection against a customer failing to pay (bad debt / credit protection).
Fixed monthly fee facility vs. pay-per-invoice factoring
Not all invoice finance is priced the same way. The table below compares the ongoing facility model used by this calculator against single-invoice (selective) factoring, where a lender discounts one invoice at a time for a flat fee.
| Fixed monthly fee facility (used above) | Pay-per-invoice factoring | |
|---|---|---|
| How it's priced | Fixed monthly fee + daily interest on funds drawn | Flat percentage fee per invoice, charged once |
| Best suited to | Ongoing working capital across your whole debtor ledger | One-off or occasional invoices |
| Reflects payment speed? | Yes — interest scales with debtor days outstanding | No — the fee is the same regardless of how quickly the customer pays |
| Typical structure | Revolving facility against your debtor ledger | Selective / single-invoice discounting |
Frequently asked questions
What is invoice finance and how does it work?
Invoice finance allows businesses to unlock cash from unpaid invoices before customers pay. A lender advances funds against your debtor ledger, then charges a fee for the facility — either a fixed monthly fee plus daily-accrued interest (an ongoing facility), or a flat percentage fee per invoice (single-invoice factoring).
Who is invoice finance suitable for?
Invoice finance suits B2B businesses that issue invoices with 30–120 day payment terms and experience cash flow gaps. Common industries include recruitment, logistics, manufacturing, professional services, and wholesale distribution.
How much does invoice finance cost in Australia?
Under a fixed monthly fee facility, cost is a set monthly fee plus interest that accrues daily on funds drawn — commonly landing between 0.5% and 2% of monthly revenue depending on utilisation, debtor days, and the interest rate. Under pay-per-invoice factoring, costs are typically a discount or service fee of 1.5–4% of the invoice value per 30-day cycle. Actual costs depend on industry, debtor quality, invoice volume, and payment speed.
What is a fixed monthly fee invoice finance facility?
A fixed monthly fee facility charges a set monthly fee for access to the facility, plus interest that accrues daily on the funds you actually draw down, calculated from your utilisation and average debtor days outstanding (DSO). It's designed for ongoing use across your whole debtor ledger, rather than financing one invoice at a time.
How is invoice finance interest calculated?
Interest is calculated on the funds advanced (monthly revenue × utilisation), at the facility's annual interest rate divided by 365, multiplied by the average number of days debtors take to pay (DSO). Interest accrues daily — the longer your customers take to pay, the more it costs to fund that revenue.
What's the difference between a fixed monthly fee facility and pay-per-invoice factoring?
A fixed monthly fee facility charges a set monthly fee plus daily-accrued interest on funds drawn across your whole ledger, scaling with how long debtors take to pay. Pay-per-invoice factoring instead charges a flat percentage fee on a single invoice's value, once, regardless of how quickly that invoice is paid.
Will my customers know I am using invoice finance?
It depends on the structure. Invoice factoring is typically disclosed to customers. Confidential invoice discounting is not — your customer continues paying you as normal.
How quickly can I access funds through invoice finance?
Once a facility is established, drawdowns on new invoices can typically be processed within 24 hours. Initial setup and approval usually takes 3–7 business days.
What is the difference between recourse and non-recourse invoice finance?
With recourse invoice finance, your business is responsible for repaying the advance if the customer doesn't pay. With non-recourse, the lender absorbs the bad debt risk. Most Australian facilities are recourse.