Daily rate
A fee calculated per day on the amount funded.
Why it matters
Daily rates accumulate as long as the invoice remains unpaid, making actual cost dependent on the customer payment timeline rather than the invoice terms. A 0.05 percent daily rate on a 60-day invoice equals 3 percent of the funded amount—identical in cost to a 3 percent flat fee. But if the customer pays in 90 days, the daily rate becomes 4.5 percent. Industries with customers who routinely pay slowly face significantly higher effective costs under daily-rate pricing than under flat-fee structures. Daily rates reward fast-paying customers and penalize programs with slow payers.
How it appears in contracts
Daily rate pricing appears in the Fee Schedule or Pricing section of the factoring agreement. The rate is typically expressed as a percentage per day applied to the advance amount or the invoice face value. The agreement should specify when the daily rate clock starts: invoice date, submission date, or funding date. Some agreements include a rate cap or a maximum fee amount per invoice, which protects sellers with unexpectedly slow-paying customers. Daily rate structures require sellers to monitor payment status actively to forecast costs.
Related terms
Related reading
Sources
- International Factoring Association - International Factoring Association. Accessed 2026-05-19.
- Secured Finance Network - Secured Finance Network. Accessed 2026-05-19.