Net Funds Employed (NFE)
Net funds employed (NFE) is the amount of money a factor or receivables lender actually has outstanding to its clients at a point in time: advances made against purchased receivables, net of reserves held back and cash already collected. It is the receivables-finance equivalent of loans outstanding and the base on which a factor earns its yield.
How it is calculated
Start from the gross value of purchased receivables, subtract the reserve held back at funding, and subtract cash collected from debtors. What remains is the funds currently employed. NFE rises as new invoices are purchased and falls as debtors pay, so it moves every day.
NFE vs facility limit vs turnover
The facility limit is the maximum a factor will advance; turnover is the total invoice value factored over a period; net funds employed is what is actually outstanding now. A factor can have high turnover but modest NFE if receivables turn quickly.
Why it matters
NFE is the base on which discount and fees earn a return, so it drives revenue and capital efficiency, and it consumes a factor's own funding lines. Zolvo keeps the funded balance and reserves current through reconciliation and portfolio monitoring, so NFE reflects real exposure, see factoring.