What are the costs of factoring? Check what you are paying for the factor

Service Business

Factoring is a very convenient way of financing the company's day-to-day operations. Thanks to it, companies can maintain financial liquidity, which is especially important now, in times of unfavorable economic conditions. The cost of the factoring service depends on the specific offer of a given factor. He can charge various types of fees, from interest, through commission, to additional factoring costs, which you need to be particularly alert to. Check what amount you should be prepared for before signing the factoring agreement.

Factoring offer - what is important?

When comparing factoring offers, remember to pay attention not only to the costs themselves. Factoring can be cheap, but financing terms are unfavorable or inflexible. Therefore, always check carefully:

  • Conditions for granting financing - each factor has its own requirements regarding, inter alia, the minimum period of running a business or the factorer's creditworthiness.
  • Factor type - bank factors usually have a more complicated factor verification process.
  • Factoring limits - maximum amounts to which the factor undertakes to cover the financing.
  • Factoring costs - their amount, method of calculation, as well as transparency of the presentation of fees. Check especially for unusual, additional costs.
  • Other conditions for granting financing - e.g. the percentage of the invoice to which the advance is paid, time to withdraw funds, limit for the contractor, etc.

Basic factoring costs

The basic factoring costs usually include:

  • preparation commission,
  • factor commission,
  • interest.

However, not every factor has the same fees and not all of the above costs always occur.

Factoring commission

The commission is a fee for the factor calculated as a percentage of the gross amount on the invoice covered by factoring or on the advance payment. The commission is typically from 0.2% to 3% per month. It happens that the commission is charged daily, thanks to which the factor pays only for the actual period of using the financing. The rate depends mainly on the declared turnover of the factorer, as well as the factoring limit, the number of invoices and contractors as well as the creditworthiness of the factorer and its debtors. It is possible to negotiate the commission rate before concluding the contract with the factor.

Preparation commission

The initial fee charged by the factor for the preparation of the contract and the analysis of the creditworthiness of the factor and his contractors is the so-called preparation commission. The standard rate ranges from 0.1% to 3% of the factoring limit granted to the factorer. It happens that it takes the form of a fixed fee in a given amount, not a percentage. Importantly, not every factor requires a preparation commission.

Interest for the factor

The factor pays the factorer an advance on the gross value of the invoice - most often in the range from 80% in traditional factoring to 100% in microfactoring and online factoring - for the future payment from the contractor. It is on this advance payment that interest is most often charged. It happens that the factor charges them on the gross value of the entire invoice.

The factor charges capital interest, which is remuneration for the use of the factor's capital, and interest for delay, which is a compensation for late payment. Statutory interest for financing is applied during the financing period and the additional financing period. Currently, the maximum statutory interest rate per annum is 7.2%.

Method of calculating interest in factoring

There are two ways of calculating interest in factoring. Discount interest, which occurs in full factoring, is charged in advance, i.e. immediately when the advance payment is made. For example, when the down payment amounts to 80% of the invoice value, the factorer receives the funds reduced by the interest deducted from the 80%.

Some factoring companies may charge interest in arrears - this type of interest is charged daily (from the first day of the advance payment, throughout the period of financing the invoice) as a percentage of the advance payment. The invoice for such interest is issued by the factor at the end of the month. The customer can pay it himself or the amount may be deducted when settling the financed invoice.

Sample calculation of factoring costs

Let's check on an example how much basic factoring costs, i.e. interest and factoring commission, can be in practice.


  1. Gross invoice value: PLN 10,000.
  2. Advance payment paid: 80%, i.e. PLN 8,000.
  3. Interest: 7.2% per annum.
  4. Factoring commission based on the gross invoice value: 1%.
  5. Financing time: 30 days.


  1. Interest: 8,000 x 7.2% x 30 (days) / 365 (days) = PLN 47.34.
  2. Commission: 10,000 x 1% = PLN 100.

Total: PLN 147.34.

Expenses due to factoring commission and interest can be classified as tax deductible costs and deducted from tax. Factoring services are subject to VAT at a rate of 23%. However, you should watch out for loan-factoring or pseudo-factoring companies that tax their services, although they should not.

How to avoid such a risk? When deciding on factoring, it is worth choosing a company that not only transfers cash to your account, but also monitors receivables and verifies contractors. It is good if he is a member of the Polish Factors Association.

What influences factoring costs?

Why do different factors have different factoring costs? Why do the overall costs proposed by the factor often change after submitting an inquiry from a specific company and preparing an offer? The costs result, first of all, from the factor's financial policy. Some charge a higher commission but lower interest for it, others forgo any additional fixed fees and only benefit from interest and commission. Factoring costs also depend on factors such as:

  • Number of contractors covered by factoring - the more, the lower the risk and thus the lower fees.
  • Number of invoices covered by factoring - the more low-value invoices, the more paperwork for the factor and the higher the preparation and administrative fees etc.
  • The credibility of the factorer and his contractors - the higher the risk, the higher the costs.

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Other costs under the factoring agreement

Many factors stop at basic fees. However, some may require additional fees depending on what type of factoring or what custom services they offer. It is worth checking if the contract does not include costs such as:

  • Legal service fee, often charged by banks.
  • Fee for the analysis of the credibility of the factorer's contractors.
  • Fee for the unused limit.
  • Interest for exceeding the payment deadline.
  • Commission del credere, i.e. for taking over the risk by the factor in the case of recourse factoring. It ranges from 0.1 to 1.5% of the invoice value and is estimated each time based on a risk assessment.
  • Insurance cost with full factoring.
  • Debt collection costs in the event of late payment by the contractor.
  • Monthly fixed fee for access to the online factoring service.
  • Annual factoring limit maintenance fee.
  • Other fees for additional services, e.g. preparation of annexes, reports, transfers, etc.

Take the costs into account, but the benefits

Factoring is a financial service that brings a number of benefits - including non-obvious ones, not only related to the company's financial liquidity. When deciding to cooperate with the factor, you should be aware of the related costs. With an attractive offer and a transparent table of fees, financing can be obtained cheaper than loans or credits. Moreover, not one-off payments, but provided on a regular basis and without any impact on creditworthiness.