Charges that a factor places on a factoring transaction against a set of services/ facilities provided to the seller, including collection and receivables management, and credit protection. Service charge (also known liberally as factoring commission or factoring fee) is typically calculated as a percentage of turnover/ invoice value. For instance, if the service charge is fixed at 1.5% and the invoice value is $10,000, the service charge will be $15,00. The percentage of service charge is determined at the initiation of the factoring arrangement, in consideration of multiple factors, such as annual sales volume, number of customers, number of invoices and credit notes, average invoice value, and customer risk. With all other factors held constant, service charge is commonly higher for non-recourse factoring and export factoring than other types.

Factoring service charges are a key component of factoring charges (in addition to discount charge and handling fee).