Definition
The portion of the reserve returned to a client after a customer pays.
Why it matters
Also called the reserve release.
Where it shows up in a deal
The rebate is the reserve release line on your factoring statement, generated when the customer's payment clears and the factor applies it. Release cadence varies - some facilities rebate per invoice within a day or two of cleared funds, others batch weekly - and that cadence affects your working capital more than most clients expect.
What it affects
- Cadence matters: weekly batching can hold a week of your own cash that per-invoice release would return.
- Fees, credit memos and unreconciled short-pays are deducted before the rebate is calculated.
- Cross-collateralization lets the factor offset amounts owed on other invoices against the rebate.
- A rebate cannot be calculated until the payment is applied, so unidentified receipts delay it.
A worked example
A $75,000 invoice funded at 90% leaves a $7,500 reserve. The customer pays in full on day 35 under a 15-day increment schedule at 1.1% per increment: three increments is 3.3%, or $2,475. The rebate is $7,500 - $2,475 = $5,025, bringing total proceeds to $72,525.
The common mistake
Related terms
- ReserveThe portion of an invoice held back by a factor until the customer pays.
- Discount RateThe fee a factor charges, usually expressed per 30 days or per 10-day increment.
- ChargebackA deduction a customer, often a retailer, takes from an invoice payment.
- Schedule of AccountsThe list of invoices a client submits to a factor for funding.
Questions about how rebate affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
