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Miraç Özdemir
Trade Credit, Rediscount & Financing

Invoice Factoring Cost Calculator

Calculate commission, financing interest and BSMV on cheque discounting or invoice factoring and see the net cash received and the annualised cost.

Version 2

Things to keep in mind:

  • Contract-specific extras such as file fees, appraisal, collateral, collection or penalty charges are not included.
  • The BSMV rate and exemptions may differ by transaction type and period; confirm the rate on your statement.
  • Non-payment of the receivable at maturity (a bounced cheque) and the interest effect of any unused advance are not modelled.

Calculator

Receivable and Term

TRY

Nominal amount of the receivable at maturity that is cashed or factored (TRY).

Share of the receivable paid upfront. Usually 100 for cheque discounting, often 70-90 for factoring; use the rate in your contract.

One-off commission as a percentage of the receivable. If your contract charges it on the advance, convert the rate accordingly.

Number of days the advance is outstanding (payment date to maturity). For a group of cheques use the weighted average maturity tool.

Financing Cost

Simple annual interest rate charged on the advance (e.g. 36 = 36%).

Day basis used to convert annual interest to daily: 360 or 365 (see your contract).

Banking and Insurance Transactions Tax rate applied to interest and commission. Use the rate shown on your statement; enter 0 if exempt.

After the first calculation, the result updates automatically when you change a value.

Result

Enter the values and press Calculate to see the result here.

About this tool

When you sell a receivable (cheque, note or invoice) to a bank or factoring company before maturity, the cash you receive is lower than the face value. This tool shows commission, financing interest and BSMV separately and annualises the true cost of the transaction. You can use it to compare offers from different institutions on the same yardstick.

Formulas

  • Advance = Receivable × Advance rate / 100
  • Commission = Receivable × Commission rate / 100
  • Interest = Advance × Annual rate × Days / (100 × Day basis)
  • BSMV = (Commission + Interest) × BSMV rate / 100
  • Total cost = Commission + Interest + BSMV
  • Net cash = Advance − Commission − Interest − BSMV
  • Period cost (%) = Total cost / Advance × 100
  • Annualised cost (%) = Total cost × Day basis × 100 / (Net cash × Days)

Amounts are rounded to 2 decimals, half up (HALF_UP). If days is 0 the annualised cost cannot be computed and is shown as 0.

Example 1: TRY 10,000 receivable, 90% advance, 2% commission, 30 days, 36% annual rate (360-day basis), 5% BSMV. Advance 9,000; commission 200; interest 9,000 × 36 × 30 / 36,000 = 270; BSMV (200 + 270) × 5% = 23.50. Net cash is TRY 8,506.50, total cost TRY 493.50, period cost 5.48% and annualised simple cost 69.62%.

Example 2 (factoring): TRY 250,000 receivable, 80% advance, 1.25% commission, 90 days, 45% annual rate (365-day basis), 5% BSMV. Advance 200,000.00; commission 3,125.00; interest 22,191.78; BSMV 1,265.84. Net cash is TRY 173,417.38, total cost TRY 26,582.62, period cost 13.29% and annualised cost 62.17%.

How to read the result: "Net cash received" is the money that reaches your account at the end of the transaction. "Total cost" is commission plus interest plus BSMV. "Period cost" is the cost over the term relative to your advance, and the "annualised simple cost" converts it to a yearly figure; the easiest way to compare offers with different maturities and advance rates is to look at the annualised cost. The annualisation is simple, not a compounded effective rate. The result depends on the rates in your contract; add other fees (file, appraisal, collateral) separately.

How to use

  1. Enter the face value of the receivable.
  2. Enter the advance rate (usually 100% for cheque discounting).
  3. Enter the commission rate and the days to maturity.
  4. Enter the annual financing rate, the day basis (360/365) and the BSMV rate.
  5. Press Calculate and review the net cash and total cost.

Notes

Amounts are rounded HALF_UP to two decimals. Interest is simple interest on the advance only. Commission is assumed to be charged on the receivable. The annualised cost is a simple annualisation, not a compounded effective rate.

Sources

Frequently asked questions

4 questions

  1. In cheque discounting the cheque is usually discounted and paid in full upfront. In factoring the receivable is assigned to the company; the advance rate is often below 100% and collection or risk services may be included. Change the advance rate to model either case.

Next step

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