Updated 2026-05-19 · By Dana Whitfield

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.

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. Reading the schedule in its entirety—rather than stopping at the headline rate—is necessary to model actual cost.

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. Confirming the exact base for the fee calculation is one of the most important clarifying questions to ask before signing.

The time period is the most variable element across factoring fee schedules. A flat fee means the same cost regardless of how long the customer takes to pay. A tiered fee means the cost increases in steps at defined intervals—often 30-day brackets. A daily or weekly rate means the cost accumulates continuously until the customer pays. The same percentage expressed differently across these structures produces very different outcomes for slow-paying customers.

Add-on fees stack on top of the base discount rate and can materially change total cost. Wire transfer fees typically run $15 to $35 per funding event. Same-day funding fees apply when an advance is requested and sent the same business day. Credit check fees may apply when the factor evaluates a new account debtor or re-evaluates an existing one. Invoice processing or administrative fees may appear as flat charges per invoice regardless of the invoice amount.

Minimum fees affect programs with low-volume periods. If the fee schedule includes a monthly minimum—say $1,200—the business owes that minimum even in months where factoring fees on actual invoices total only $600. The minimum converts a portion of the variable factoring cost into a fixed monthly obligation. This is worth modeling against the business's lowest expected volume month to understand the actual floor.

Default charges are a separate line item in many schedules. These are fees that accrue after a defined default event—often at a higher daily rate than the standard discount rate. A business that is charged back on an invoice may find that the default rate begins accruing on the outstanding balance while the dispute is resolved. Understanding when the default rate triggers and how long it accrues helps quantify the cost of a chargeback.

The safest comparison across providers is not one headline rate against another. Model the actual dollars deducted from a representative invoice over the range of payment cycles you expect—30, 45, and 60 days—using each provider's fee schedule. Then add wire fees, minimums, and any other charges to get total cost per invoice. That dollar figure, compared across scenarios, is more informative than a rate comparison that ignores structure differences.