Put the agreement into dollars
In a hypothetical agreement where a 1.30 factor applies to a stated $25,000 amount, total remittances would be $32,500. With $500 in fees withheld at disbursement, usable proceeds would be $24,500. The difference between total remittances and usable proceeds would be $8,000. This assumes the factor does not already include the withheld fees; verify the actual agreement.
Keep the schedule beside the total
Payment frequency, amounts, and timing affect the pressure on your cash. Ask how debits are determined and whether the agreement provides adjustments when revenue changes. A fixed-payment illustration cannot predict a variable revenue-based remittance.
A factor is different from APR
A factor is a multiplier in this example. An annualized cost calculation also needs cash-flow timing and appropriate fee treatment. Our calculator does not calculate APR or produce a legally required disclosure. Ask the provider for applicable disclosures.
Before comparing offers
Put both agreements into the same worksheet and leave unknown items unanswered.
- Stated amount and actual amount deposited
- Withheld and separately paid fees
- Total remittances and their schedule
- Revenue-adjustment and reconciliation provisions
- Early payoff terms and additional charges