Need some advice on factoring.

Have a deal right now with a factor that is getting ready to close.

Here are the terms some of the terms

80% advance rate

1M in volume for one year

500K Facility limit.

3.75% Factor fee for 0-60 days
4.75 % 61-75

He has about 900K in AR and he owes around 300K in MCA's.The factor is going to pay off the MCA's.

He wants to factor all of his AR.

My question is, how does the funding work? Will they fund him a large sum upfront or will it be in batches based on his invoices. The rep I am working with is not really explaining things clearly.

I've heard of brokers that charge fees outside as well.Is ok to charge fees outside of what the factor is paying? If so how much on a transaction this size? They are paying 10% of the fees residually.

Also Assuming he does 1M worth of business in a year and they charge 3.75 and his debtors pay on time... 1M x 3.75=$37,500? Is that the cost of funds?(excluding any fees) does that mean commission would be 10% of the $37,500=$3,750 divide by 12=312.50 a month?

Hoping to get some good feedback here.