Also called: Advance percentage, Funding rate
Advance rate
An advance rate is the percentage of an invoice or asset value that a financier will fund upfront. The remainder, less fees, is released when the customer pays or the transaction completes.
What is an advance rate?
An advance rate is the percentage of an invoice or asset value that a financier will fund upfront. The remainder, less fees, is released when the customer pays or the transaction completes.
Example
An 80% advance rate on a $250,000 ledger releases $200,000 now, with the $50,000 balance paid on collection less charges.
Why it matters
A higher advance rate means more cash today, but rates are set by debtor quality, concentration and dispute history.