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July 5th, 2012, 04:07 PM  #1 
Newbie Joined: Jul 2012 Posts: 1 Thanks: 0  Projected Annual Yield
Hi all, I’m struggling to figure out how to calculate projected annual ROI (maybe I should call this projected annual yield?). For background: I run a factoring business (accounts receivable financing) and advance 80% of my clients' invoices to them in 24 hours. When their customer pays us direct 3060 days later, we rebate to the client the remaining 20% minus our discount fee which ranges 35% for the first 30 days an invoice is outstanding. The attached spreadsheet shows a customer who’s invoices are paid every 15 days (days between advance and receipt) but my client factors this account only once a month (days between receipts). As I understand it, the formula for Annual Yield is: Average Invoice ROI x Average Annual Turns. The thing I’m confused about is how to calculate annual turns. Would it be 365/15 or 365/30? 365/15 assumes the average invoice turns over 24 times a year but with this customer, I would receive payment only 12 times a year. Thanks so much! 
July 6th, 2012, 07:14 PM  #2  
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,585 Thanks: 1038  Re: Projected Annual Yield Quote:
you advance me $80,000.... 45 days after your advance to me, my customer sends you $100,000; you then send me $20,000 less "something": what will this "something" be, and how is it calculated? In other words, above really means I borrowed $80,000 from you, and paid you back 45 days later: what will you charge me as interest? Don't confuse me with fancy terms like "discount fees"... how much will I pay you over and above the $80,000?  

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