Glossary
What is Advance Rate?
The advance rate is the percentage of an invoice or asset's value that a lender or factoring company provides up front. In invoice factoring, the factor advances a portion of the invoice amount right away and holds back the rest as a reserve until the customer pays. Advance rates vary by industry, customer credit quality and the provider's policies. In asset-based lending, the term also describes how much a lender will lend against receivables or inventory.
Example
On a $10,000 invoice with an 85% advance rate, the business receives $8,500 now and the remaining balance, minus fees, after the customer pays.
Related funding
Invoice Factoring: Turn slow-paying invoices into cash now.
Related terms
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