Definition
A contractual minimum amount of invoices a client must factor each month.
Why it matters
Missing it can trigger fees — ask about minimums upfront.
Where it shows up in a deal
The minimum sits in the body of the factoring agreement and is billed monthly in arrears as a shortfall. It can be expressed as a dollar volume of invoices or, more often, as a floor on the fees the factor earns in a month, which makes it easy to overlook when comparing two headline rates.
What it affects
- A shortfall is billed whether or not you had invoices to fund, including in a seasonal trough.
- Minimums usually survive a pause in your business and often survive early termination.
- A low rate paired with a minimum you miss twice a year can cost more than a higher rate with none.
- Ask for the minimum as a dollar figure per month, not as an implied volume.
A worked example
A $5,000 monthly fee minimum at a 1.5% rate implies about $333,333 of invoices factored. In a month where you factor $180,000, fees earned are $2,700 and the shortfall billed is $2,300 - an effective cost of $5,000 on $180,000, or 2.78%.
The common mistake
Related terms
- Factoring AgreementThe contract that sets advance rates, fees, recourse terms and duration.
- Discount RateThe fee a factor charges, usually expressed per 30 days or per 10-day increment.
- Term SheetA non-binding summary of proposed financing terms.
- Spot FactoringFactoring a single invoice without a long-term contract.
Questions about how minimum volume affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
