Factoring

How much do client get?

 

Most factors calculate advance on a pool of invoices basis and not on a per invoice basis.

The amount to be advance is based on the followings:

The invoices outstanding ( SLC)

The approved client limit

The limit set of each customer

Concentration limit

Advance percentage

Disputed debt

 

The debt available is called eligible debt. Below is an example of computation of eligible debt computation:

 

Debt outstanding (SLC)           $1,000,000

Deduction for

(exceeding customer limit

concentration

disputed debt)-----------------     $300,000

Eligible debt                                   $700,000

Reserve 20%                                  $140,000

Available advance                         $560,000

Less previous advance                  $400,000

Advance available                          $160,000

 

The amount available is dynamic and may change depending on the invoices submitted, the customer payment, dispute etc.