The reserve is the difference between an invoice's face value and the advance. It protects the factor against short payments, disputes and its own fees. Once the customer pays, the factor deducts what it is owed and sends you the balance, often called the rebate.
Anything that cuts what the customer pays cuts your release. A short payment, a credit memo or a disputed line item comes out of the reserve first.
Example: On $60,000 of invoices at an 80% advance, the reserve is $12,000. With a $1,500 fee, you get $10,500 back. If the customer short-pays by $2,000, the release drops to $8,500.
Ask how often reserves are released, and whether the factor can hold one customer's reserve to cover another customer's unpaid invoice.