Minimum volume

A floor on how much business must flow through the factoring program in a given period.

Why it matters

Failing to meet minimum volume can trigger penalty fees even if business slows. Verify the fee structure for shortfalls before signing.

How it appears in contracts

The minimum volume requirement appears in the 'Volume Commitment,' 'Minimum Purchase,' or 'Monthly Minimum' section. Look for: (1) how the minimum is expressed—dollar amount of invoices or dollar amount of earned fees; (2) the measurement period—monthly, quarterly, or rolling average; (3) the shortfall fee formula—typically the rate margin applied to the unfunded gap; and (4) how the minimum interacts with the early termination clause. In many agreements, consistently missing the monthly minimum for two or three consecutive periods gives the factor the right to declare a default and accelerate all obligations, which is a more severe consequence than the shortfall fee alone.

Related terms

Related article: What is 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.