The annual cost of an advance depends on how many days collection takes. The page estimates it two ways for an invented case and then works a cash book, a cash ratio and a cash reserve target by hand, with the payment calculator for the physician office case.
Annualizing a Hanford, CA Gas Station's Advance by Hand
Illustration only, invented figures: a gas station convenience store in Hanford, CA takes a $12,535 advance with a 1.33 factor and an 11% holdback on $1,395 of average daily card sales. In this invented example, $16,671.55 is collected at $153.45 a day over about 109 business days, and the cost is $4,136.55.
In this invented example, a straight-line estimate divides the cost by the advance and spreads it over 109 business days, taken as 260 business days a year: about 79 percent a year. Because the amount still out shrinks every day, a day-by-day discount of the same collections gives a higher figure: about 143 percent a year (our arithmetic).
| Method | What it assumes | Annual estimate |
|---|---|---|
| Straight-line | The whole advance is out for the whole stretch | About 79 percent |
| Day-by-day | Each day's collection reduces what is still out | About 143 percent |
Worked by hand for comparison, an amortized loan of the same invented $12,535 at a 14.83% annual rate over 12 months carries $1,029.56 of interest, against the advance's invented $4,136.55 cost. County Business Patterns lists 37 Kings County, CA establishments coded as gasoline stations with convenience stores for 2023 (NAICS 447110).
A Cash Book Week at a Hanford, CA Limited-Service Restaurant, Turned Into a Payment Ceiling
A cash book is a running record of cash in and cash out. A week of it shows what is left to carry a new payment.
| Line | Amount | Note |
|---|---|---|
| Deposits for the week | $18,485 | Card and cash sales |
| Costs paid for the week | $16,915 | Food, wages, rent share, utilities |
| Left over | $1,570 | Before any new payment |
In this invented example, $1,570 a week is about $6,803.33 a month (52 weeks over 12 months). A $21,385 request at a 12.94% annual rate over 24 months works out by hand to $1,016.08 a month, about 15% of that invented monthly surplus.
Kings County, CA had 113 limited-service restaurants with paid employees in 2023, employing 2,263 people (County Business Patterns, NAICS 722513).
Cash on Hand Against Bills Due: A Kings County, CA Grocery Store's Cash Ratio Before Pricing Produce Displays
The cash ratio divides cash on hand by the bills due within a year. It shows how much of those bills the business could pay today without selling stock or collecting from customers.
Illustration only, invented figures: a grocery store has $14,230 in the bank and $38,760 of bills due within the year. In this invented example, the cash ratio is 0.37, meaning cash covers about 37 cents of each dollar due.
A store with a low ratio that wants freestanding produce displays may prefer a payment over a cash purchase, so the cash it has stays available for the bills already due.
Payment, Interest and Total for a Hanford, CA Physician Office's Cash Flow Request
Type an amount, an annual rate and a term in months into the calculator here; it returns an estimated monthly payment, the interest over the term and the sum of every payment. Entering years instead of months gives a payment far too high.
| Term | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| 12 months | $1,768.98 | $1,492.76 | $21,227.76 |
| 18 months | $1,218.94 | $2,205.92 | $21,940.92 |
| 24 months | $944.55 | $2,934.20 | $22,669.20 |
In this invented example, a physician office taking the 18-month term pays $1,218.94 a month; the 18 payments total $21,940.92.
A Two-Month Cash Reserve Target for a Kings County, CA Clothing Store
Illustration only, invented figures: a clothing store has $11,865 of fixed monthly costs and wants two months of them held in reserve, $23,730. In this invented example, it holds $15,325, so it is $8,405 short of that target.
A new monthly payment raises the fixed costs the reserve has to cover. Running a payment through the calculator first shows how much the reserve target moves; the tools page lists what else is there.
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