Factoring Model

The factoring model begins with client rollforward: opening clients plus new additions less monthly attrition. Monthly invoice volume is based on average opening and closing clients multiplied by volume per client, with an optional growth factor.

• Invoice cohorts then flow through four ageing buckets (0–30, 31–60, 61–90 and 90+ days), and closing receivables are the remaining balance from current and earlier cohorts. Expected write-offs are calculated from bucket exposures, assumed default probabilities and loss given default.
• Advance rates determine client reserves, which are the unadvanced invoice share released over time using collection patterns and a days-based lag.

Assumptions feed client volume and ageing, which in turn drive funding, revenue and reserve balances. Factoring fees are tiered and applied to portions of total monthly volume, with a minimum monthly fee.

• Discount income is calculated on average gross receivables using a base rate plus client margin, divided by 12. Non-recourse premium and insurance costs depend on non-recourse volume.
• Warehouse debt takes the lower of eligible receivables times lender advance or the facility cap. Equity top-ups after the first month cover the gap between target receivable-based equity and the prior period's book equity.

These funding costs then feed into net revenue and operating expenses.

The model produces a dashboard showing final-month receivables, advances, invoice volume, yield and margin trends. Revenue Build details progressive factoring fees, minimum-fee top-up, discount and ancillary fees, and direct costs.

• Funding provides eligible borrowing base, facility cap, equity top-ups and warehouse movements. Operating cost sheets, profit and loss, balance sheet and cash flow statements are linked to these drivers.
• Ratios and covenants calculate annualised performance measures, default and dilution ratios (using trailing 12 months) and final-period covenants. Checks test selected whole-horizon conditions and three final totals.

All financial statements are integrated, with costs, write-offs, dilution and repayments typically negative, while invoice volume, receivables and debt balances are positive.

This template is designed for factoring companies and businesses using accounts receivable finance to review revenue yield, warehouse utilisation, equity requirements and credit performance over a 36-month horizon. It supports stress testing by editing individual assumptions, as there is no dedicated case selector.

• The model captures monthly dynamics of invoice factoring, from client onboarding to fee income and funding draws. Limitations include that discount income is charged on average gross receivables rather than advances, and that recourse/non-recourse mix affects premiums but does not separately eliminate credit losses or model recoveries.
• Equity top-ups follow a book-equity ratio and do not guarantee liquidity. Operating expenses based on percentages of net revenue can become positive credits if net revenue turns negative, so extreme scenarios need review.