BEHIND THE NUMBERS
How this calculation works
Worked example
The advance is £8,000 and service charge £100. Discount is £8,000 × 10% × 30/365 = £65.753425. Total cost is £165.753425 and the reserve settlement is £1,834.246575.
Example result: £165.75
Two charges use different bases
The service percentage applies to the invoice value. The discount charge applies to the amount advanced for the time it is outstanding. A larger advance improves immediate cash flow but increases the discount charge.
A negative settlement is possible
If the charges exceed the retained reserve, the provider cannot collect them all from the customer’s final payment alone. The negative settlement identifies an additional payment due under this simplified timing model.
Assumptions and rounding
- One invoice, one advance, full customer settlement after the entered number of days.
- Quoted discount is an all-in annual rate; charges are deducted from the final reserve.
Questions about this calculator
Should I enter a margin over base rate?
Enter the complete annual discount rate, including the relevant base rate and lender margin. This tool does not fetch a current base rate.
Are VAT and setup fees included?
Only if you include them in the additional-fees input. Their treatment depends on the quote and service; no universal VAT assumption is applied.