Advance Rate
The percentage of an invoice's or asset's value that a lender or factoring company advances upfront, with the remainder (minus fees) released later.
In invoice factoring, the advance rate is typically 80-90% of an invoice’s face value paid upfront, with the remaining balance, minus the factoring fee, released once the customer pays in full.
Advance rates also apply more broadly across asset-based lending, where a lender might advance a certain percentage of receivables or inventory value, and a higher advance rate generally reflects lower perceived risk in that specific collateral.
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