T425 · TradeTech & Trade Finance · Cat-26

Forfaiting vs Factoring vs Invoice Discounting Economics

Compare the net proceeds and cost of funding across forfaiting (medium/long-term trade receivables), factoring (with/without recourse), and invoice discounting for a receivables portfolio. Model advance rates, discount rates, reserves, and fees.

Forfaiting Factoring Invoice Discounting Receivables Finance v1.0 · May 2026

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Disclaimer: Rates are indicative. Actual forfaiting discount rates, factoring fees, and advance rates depend on obligor credit quality, market liquidity, and funder appetite. Validate inputs with your bank or funder before committing to a facility.

Receivables Portfolio

Total Invoice / Receivable Value ($)

Average Invoice Tenor (days)

Currency

Obligor Credit Quality

Number of Debtors

Forfaiting Parameters

Discount Rate (% pa) Applied to face value; typical 5–8%

Commitment Fee (% pa) On undrawn commitment

Arrangement Fee (% of facility)

Non-recourse (standard)

Factoring (With Recourse) Parameters

Advance Rate (%) Typical: 80–90%

Service / Factoring Fee (% of invoice) Typical: 0.5–2%

Finance Charge (% pa) On advanced funds

With recourse to seller

Factoring (Without Recourse / Non-Recourse) Parameters

Advance Rate (%)

Service Fee (% of invoice) Includes del credere 0.5–1.5%

Finance Charge (% pa)

Credit risk transferred to factor

Invoice Discounting (Confidential) Parameters

Advance Rate (% of eligible debtors) Typical: 80–85%

Discount Charge (% pa) Base rate + 1.5–3%; on advanced funds

Service Fee (% of turnover) Typical: 0.1–0.3%

Comparison Table

Net Proceeds Bar Chart

Cost Ranking (Cheapest to Most Expensive)

Suitability Matrix

Key Structural Differences

Economics Memo

T425 · v1.0 · May 2026 · Cat-26 · Policy Mandate (AP2) Export