ADVANCE RATE
Amount of money provided immediately to the company factoring its Accounts Receivable expressed as a percentage of the total invoice amount. Advance Rates usually range from 75 to 95%.

DISCOUNT FEE
Interest rate charged to the company factoring its Accounts Receivable. Discount fees are a flat fixed percentage of the total invoice amount no matter how long the customer takes to remit payment.

FACTOR
A factor is a company that provides operating capital to businesses by purchasing their Accounts Receivable.

RESERVE OR HOLDBACK
Amount of money that is not immediately provided to the company factoring its Accounts Receivable expressed as a percentage of the total invoice amount (Advance Rate + Reserve = 100% or Total Invoice Amount). This money is transferred to the factoring company once payment is received by the factor.

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