Advance Rate
The percentage of an invoice's value a factor pays you up front, before the customer pays.
The advance rate is the percentage of an invoice you receive immediately when you factor it. If you factor a $100,000 invoice at a 90% advance rate, you get $90,000 up front, typically within about 48 hours. The remaining 10% — the reserve — is released to you, less the factoring fee, once the customer pays.
Advance rate is one of the two numbers that define any factoring deal (the other is the factoring fee). A higher advance rate puts more of your earned cash in hand right away, which matters most when you're covering payroll, materials, and subcontractors. Encore advances up to 90% of approved government invoice value.
Because the federal government is a reliable payer, GovCon factoring can support strong advance rates without the higher risk pricing common in commercial factoring.
Frequently asked questions
What is a typical factoring advance rate?
Advance rates commonly range from about 80% to 90%+. Encore advances up to 90% of approved government invoice value, with the reserve released (less the fee) when the agency pays.
How is the advance amount calculated?
Multiply the invoice amount by the advance rate. A 90% advance on a $100,000 invoice is $90,000 paid up front.
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