Keystone · Working Capital & Trade
Invoice Discounting Calculator
See how much cash an invoice discounting facility releases upfront, what it costs, and its effective annualized rate.
In short: Invoice discounting advances a percentage of an invoice's value; interest accrues on the advance for the financing tenor, and fees may be deducted upfront or at settlement. The effective annualized cost is usually higher than the quoted nominal rate.
Facility terms
Gross advance
₹40.00 L
Initial net proceeds
₹40.00 L
Advance − upfront deductions
Total financing cost
₹1.18 L
- Advance (80% of invoice)
- ₹40,00,000
- Interest / discount charge
- ₹1,18,356
- Processing fee
- ₹0
- Upfront deductions
- ₹0
- Initial net proceeds
- ₹40,00,000
- Residual at settlement
- ₹8,81,644
- Effective annualized cost
- 12.00%
Effective cost = total financing cost ÷ initial net proceeds, annualized on the selected day-count basis (simple-interest convention; not APR compounding).
Worked example
A ₹50,00,000 invoice at an 80% advance, 12% p.a., 90-day tenor on a 365-day basis advances ₹40,00,000 and accrues roughly ₹1,18,356 of interest. A 1% processing fee adds ₹50,000.
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Why is the effective cost higher than the quoted rate?
Fees and upfront deductions reduce net proceeds, so the cost relative to cash actually received is higher — especially over short tenors.
Is invoice discounting the same as factoring?
No. Factoring usually involves the financier managing collections and can be without recourse; discounting typically stays confidential and with recourse.
This tool provides indicative estimates for education and planning only. It is not investment advice, a fairness opinion, a tax computation, a financing offer or a regulatory determination. Consult a qualified advisor before acting on any result.
Service: Trade Finance