Reserve Release
Reserve release is the payment a factor makes to its client after a financed invoice is collected, returning the held-back reserve net of fees. The reserve is the portion of the invoice the factor did not advance up front, released once the debtor pays and any chargebacks or disputes are resolved.
How the math works
On a 100,000 dollar invoice factored at an 85 percent advance rate, the client receives 85,000 up front and the 15,000 dollar reserve is held. After the debtor pays and the factor takes its fee, the remainder is released. A short-pay or dispute shrinks the release, which is how dilution flows to the client.
Timing and why it matters
Reserve release is triggered by collection, so accurate, timely reconciliation is what lets a factor release promptly and correctly. Zolvo automates the reconciliation that determines reserve releases, so they are accurate and timely rather than a manual month-end exercise.