Open data · May 2025 wage release
Funding Cost Benchmark
What each funding route actually costs a staffing agency: effective annual rate on cash advanced for factoring and payroll funding across the fee grid, compared with a bank line and with equity.
In short
Invoice factoring at a 1.5% discount fee per 30 days on a 45-day receivable costs roughly 27% effective annual rate on the cash advanced, before service fees. A bank line at 11% APR is cheaper, but most agencies under three years old cannot get one. This benchmark publishes the full fee grid so you can price your own term sheet.
What each funding route actually costs
Priced against $250,000 of monthly invoiced revenue. Effective annual rate is annualised cost over the cash actually advanced, which is the only fair comparison with a bank APR.
| Structure | Terms | Advance | Monthly cost | Annual cost | Effective annual rate | When it fits |
|---|---|---|---|---|---|---|
| Invoice factoring — competitive | 30 days | 90% | $3,000 | $36,000 | 16.0% | Clean IT or professional book, creditworthy clients, low dilution |
| Invoice factoring — typical | 45 days | 90% | $8,844 | $106,125 | 31.4% | The rate most new US and UK agencies are actually quoted |
| Invoice factoring — high risk | 60 days | 85% | $19,000 | $228,000 | 53.6% | New agency, concentrated client base or slow-paying sector |
| Payroll funding (full back office) | 45 days | 100% | $13,000 | $156,000 | 41.6% | Funder runs payroll, billing and collections; fee covers service as well as cash |
| Bank line / ABL | 45 days | 85% | $4,383 | $52,594 | 16.5% | Cheapest capital, hardest to obtain under three years of trading |
Common questions
- How much does invoice factoring cost a staffing agency?
- A typical quote of a 1.5% discount fee per 30 days plus a 0.5% service fee on 45-day terms works out around 27% effective annual rate on the cash actually advanced. Competitive books get closer to 20%; newer or riskier agencies pay well above 30%.
- Is payroll funding better than factoring?
- Payroll funding costs more because the fee also buys back-office service — payroll, billing and collections. If it removes a hire and a software stack, the all-in cost can be lower than factoring plus running those functions yourself.
Methodology and sources
- Last updated
- Next scheduled review
- Licence
- Free to reuse with attribution to LAUNCH.
- 01
Each row prices a single funding structure against $250,000 of monthly invoiced revenue, the same engine that powers our funding cost calculator.
- 02
Factoring cost = (advance × discount fee × days/30) + (invoiced value × service fee). Effective annual rate is annualised cost divided by the cash actually advanced, which is the only fair comparison against an APR.
- 03
Fee grids shown are the ranges commonly quoted to UK and US staffing agencies. They are structural rates, not offers, and your own term sheet will differ on advance rate, reserve, recourse and minimum volume.
- 04
Equity is not shown as an APR because it has none. It is included as a dilution comparison at the LAUNCH. seed range of $50k–$250k.
Cite this index
This data is free to quote, cite and republish with attribution and a link.
LAUNCH. (2026). The LAUNCH. Funding Cost Benchmark. Launch Found. Retrieved from https://launch-rec.com/data/funding-cost-benchmark
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