When new clients approach ei Funding about growing their business, one of the questions that’s always top of mind is: “how much does invoice factoring cost?” Business owners who’ve never worked with a factor don’t always know what to expect, and many people have misconceptions about the fees involved in invoice factoring, often believing it to be a more expensive option compared to bank financing.

The bottom line is that with invoice factoring, businesses only end up paying a few pennies for each dollar factored. 

ei Funding is committed to a straightforward and transparent rate structure that’s designed to help you keep more of your hard-earned money. Every business partnership is different, so the exact percentages will vary, but for most businesses (regardless of scale or industry) invoice factoring is one of the most affordable and reliable financing options available. 

So What Is the Actual Cost of Factoring?

illustration of a scale, with a businessman on his laptop on one end and a bag of cash on the other

Let’s say your business has partnered with ei Funding to get cash advances on your invoices, one of which is worth $1,000. When we factor said invoice, we’ll advance you 80 to 90% of its face value, meaning your company will get up to $900 of cash to continue growing and operating your business. 

At this point, your work is done — your factoring company will handle collecting on the invoice from your customer. Once the customer has paid us, we’ll pay you the remaining 10 to 20% of the invoice value, minus the factoring fees. For that $1,000 invoice, those fees are typically around $25 to $35 — that’s just 2.5-3.5% of the original invoice amount.

So that $900 of cash you received and were able to immediately put into funding payroll, equipment upgrades and more? With invoice factoring, it only costs you cents on the dollar.

How Does the Cost of Invoice Factoring Compare to Other Financing Options?

Illustration of a man inspecting a bank loan concept with a large magnifying glass, comparing how much does invoice factoring cost

Compared to other traditional forms of business financing, invoice factoring is an easier, simpler method of securing immediate funding for your company, which ultimately saves you money by rejecting the trappings of high-interest loans, hidden fees and missed deadlines. 

Want to learn more about the different types of financing options available? Check out our blog, Comparing Your Business Cash Advance Options: Which Is Best?

With invoice factoring, you don’t need to worry about interest rates, daily withdrawals or having to pay off all the money borrowed plus interest at the end of the term loan. As far as contracts go, you’re not locked in if you end up needing to pursue different funding methods. You can cancel your agreement with ei Funding at any time, so long as you do so in writing 30 days before your intended stop date. 

Invoice factoring is also not considered debt, as it involves the sale and purchase of your invoices for goods and services between your business and the factor. There are no hidden credit card fees, no tricks, no unexpected withdrawals — just simple predictability and consistent working capital.

If you want to learn more about how invoice factoring stacks up against other financing options you may be considering, check out our Guide to Invoice Factoring.

Learn More about Invoice Factoring