---
title: "Reserve"
url: https://carrierkyc.com/glossary/reserve
description: "The reserve is the part of an invoice's value a factor holds back after the advance, releasing it to the carrier once the debtor pays, minus fees and chargebacks."
---

# Reserve

**Definition:** The reserve is the part of an invoice's value a factor holds back after the advance, releasing it to the carrier once the debtor pays, minus fees and chargebacks.

Also called: Reserve account, Holdback, Rebate. Category: Factoring.

Worked example: on a $2,000 invoice with a 90% [advance rate](https://carrierkyc.com/glossary/advance-rate), the carrier gets $1,800 and $200 goes to reserve. The broker pays $2,000. With a 3% fee ($60), the factor releases $140 of the reserve to the carrier.

The reserve is the factor's first protection against short pays, disputes and [chargebacks](https://carrierkyc.com/glossary/chargeback). Some factors release it invoice by invoice as debtors pay. Others keep a rolling reserve, a balance held across all open invoices and released on a schedule or when the relationship ends.

> **Red flag: Red flags** A client pressing for early reserve release. A request to pay reserves to a new bank account. A client exiting with open chargebacks larger than its reserve. Treat any change to where reserves are paid as a [remit-to change](https://carrierkyc.com/glossary/remit-to-change) and verify it the same way.

Model different advance and reserve settings in the [factoring cost calculator](https://carrierkyc.com/tools/factoring-cost-calculator), or see the [advance rate and reserve guide](https://carrierkyc.com/guides/advance-rate-and-reserve) for more worked examples.

## Related

- [Advance rate](https://carrierkyc.com/glossary/advance-rate)
- [Chargeback](https://carrierkyc.com/glossary/chargeback)
- [Factoring fee](https://carrierkyc.com/glossary/factoring-fee)
- [Factoring advance rate and reserve, with worked examples](https://carrierkyc.com/guides/advance-rate-and-reserve)
- [Factoring cost & APR calculator](https://carrierkyc.com/tools/factoring-cost-calculator)