How to read a factoring fee schedule
A factoring fee schedule should be read line by line, including the base fee, fee period, add-on charges, reserve deductions, and default charges.
- Identify the base fee, the time period, and the invoice amount to which the fee applies.
- Check whether fees repeat, tier up, or convert to daily charges after a stated period.
- Separate normal funding costs from default, wire, audit, minimum, and termination charges.
- Ask for a written example using your invoice size, customer payment timing, and expected volume.
A quoted factoring fee rarely tells the whole cost story by itself. The fee schedule may separate the base discount fee from wire charges, invoice processing fees, minimum fees, termination charges, credit check fees, and default charges.
Read the schedule together with the purchase agreement. A fee that looks small over ten days may become more expensive if the same rate repeats every ten days, tiers upward after a deadline, or applies to the face amount of the invoice rather than the funded amount.
The safest comparison is not one provider's headline rate against another provider's headline rate. Compare the actual dollars deducted from a typical invoice over the expected payment period, then ask which events change that result.
Fee schedule reading points
| Line item | Question to ask |
| Base discount fee | What invoice amount and time period does it apply to? |
| Tiered fee | When does the next tier start and does it repeat? |
| Minimum fee | Does it apply even when invoice volume falls? |
| Default charge | What event triggers it and how long does it accrue? |
Example scenario
A $50,000 invoice carries a 2% fee for the first 30 days and another 1% for each additional 15 days. If the customer pays on day 47, the fee may be $1,500 before wire, minimum, or other charges.
Contract-dependent cost
Factoring fees vary by provider and contract. Treat calculator outputs and examples as estimates only, then verify the fee schedule against the signed agreement.
Related reading
Sources
- International Factoring Association - International Factoring Association. Accessed 2026-05-19.
- Secured Finance Network - Secured Finance Network. Accessed 2026-05-19.
- Small Business Financing - Federal Trade Commission. Accessed 2026-05-19.