Dilution rate

What fraction of submitted invoices end up not being fully paid, expressed as a percentage over a set period.

Why it matters

Factors use dilution rate to set advance rates and eligibility criteria. A higher dilution rate can reduce the advance offered or trigger additional reserve requirements to protect against uncollected amounts.

Related terms

Related article: Understanding dilution in invoice factoring

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.