Result
Effective annual rate
—
Your inputs are stored in this browser, so everything is still here next time. Nothing is sent to a server.
This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Effective annual rate = fee × (365 ÷ days until payment). This is linear (simple) annualization: a fee charged once for a short deferral period is converted into a rate equivalent in cost over a full year.
This conversion is the only honest way to compare factoring against other financing sources that usually quote an annual rate: a fee of '2.5% for 45 days' sounds modest on its own, but annualized it's a noticeably higher rate, because the money is only tied up briefly.
The calculation uses simple (linear) day-based scaling, not compound interest — for very short deferral periods (a few days) this can produce very large effective rate values, which is normal for linear annualization but should be interpreted against the actual typical period factoring is used for.