J&D Financial Corporation will look at the following factors when
they consider pricing your deal
- Annual Sales Volume
- Credit Worthiness of your clients
- Average Invoice Size
- Domestic or International
- Payment Terms
A typical charge for a 30 day invoice will be 2% to 4%, 3% to 6%
if the invoice is aged 60 days.
More importantly they want to charge you fairly for our services.
Having been in business for 30 years they can proudly say that the reason
why they have been in business for this long is because they have treated
clients fairly over the years.
In addition J&D Financial uses the Prime Plus Method of factoring
not the Discount Method of factoring. The Prime Plus Method is used
by larger factors while the Discount Method is used by smaller factors.
Usually the Prime Plus Method produces lower rates to you than the Discount
Method. When talking to other factors find out how they are charging
you. Ask also if there are additional fees if your receivable gets "old".
J&D does not any additional fees if your receivable gets "old".
The Prime Plus Method has two fees and only two fees. The first fee
is a one time fee per invoice called the Factoring Fee and is
charged on the gross amount of the invoice. The second fee is the
interest charge on the money advanced per invoice based on your
advance rate. The interest charge begins on the day they advance your
funds for that invoice. The interest charge is a percentage over the
prime rate that has been agreed upon prior to signing their factoring
What is the cost for a 45 day invoice for each method?
Prime Plus Method
- Factor fee is $30 ($1000 x 3% the Factoring Fee)
- Money Advanced $800 (1000 x 80% the advance rate)
- $800 x 12% APR. x 45 days = $12.00 is the interest charge for
$800 borrowed for 45days at 12% APR
- Total Cost is $30 + $12 = $42 (Factoring Fee + Interest Charge)
- $42 / $1000 = 4.2% is charged on the gross amount of the invoice
- 3% for the first 30 days is = $1000 x 3% = $30
- 1% for the next 10 days is = $1000 x 1% = $10
- 1% for the next 5 days is = $1000 is 1% = $10
- The Total is $30 + $10 + 10 = $50
- $50 / $1000 = 5% is charged on the gross amount of the invoice
As you can see the Prime Plus Method in this case gives a lower total
fee than the Discount Method, 4.2% vs 5%.