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Invoice factoring releases up to 90% of your invoice value within 24 hours. The factoring company handles credit control—chasing your customers for payment so you don't have to.
Used by over 40,000 UK businesses to unlock cash tied up in unpaid invoices. Particularly popular with recruitment agencies, manufacturers, and haulage companies where payment terms create cash flow gaps.
Rates vary by sector, turnover, and customer quality. Get an exact quote based on your circumstances.
Invoice factoring converts your unpaid invoices into immediate working capital. Here's exactly how the process works, step by step.
You deliver goods or services to your customer and raise an invoice as normal. Upload a copy to your factoring provider's portal.
Within 24 hours, the factor advances up to 90% of the invoice value directly to your bank account. You have cash to use immediately.
The factoring company contacts your customer, verifies the invoice, and chases payment when due. Your customer pays them directly.
Once your customer pays, you receive the remaining 10-30% minus the factoring fee. Typical fees: 0.5-3% of invoice value.
What sets factoring apart from other invoice finance options is the credit control service. The factor doesn't just fund your invoices—they actively manage your sales ledger, verify invoices with customers, send payment reminders, and chase overdue payments. This saves you significant time and ensures professional collections. It also means your customers know you're using finance, which some businesses prefer to avoid.
Factoring fees can seem complex. Here's a realistic breakdown using actual numbers so you know exactly what to expect.
Charged on each invoice for credit control, administration, and collections.
Typical range: 0.5% - 2.5% of invoice value
Charged on funds drawn, similar to interest. Only pay for what you use.
Typical range: Base rate + 1.5% - 3% per annum
When customer pays after 45 days:
Total received: £8,500 + £1,303 = £9,803 (cost: £197 or 1.97%)
Annual Turnover
Higher = Lower fees
Customer Quality
Blue chip = Better rates
Payment Terms
Shorter = Cheaper
Industry Sector
Some sectors cost more
Factoring works brilliantly for some businesses and poorly for others. Here's an honest assessment.
How does factoring compare to other ways of funding your business?
| Feature | Factoring | Discounting | Bank Loan | Overdraft |
|---|---|---|---|---|
| Funding Speed | 24 hours | 24 hours | 2-6 weeks | 1-2 weeks |
| Amount Available | Up to 90% of invoices | Up to 90% of invoices | Fixed amount | Fixed limit |
| Scales with Growth | Yes, automatically | Yes, automatically | No, fixed | Needs renegotiation |
| Credit Control | Included | You handle it | N/A | N/A |
| Confidential | No | Yes | Yes | Yes |
| Security Required | Your invoices | Your invoices | Often property/assets | Debenture/guarantee |
| Typical APR | 8-15% | 6-12% | 7-15% | 15-25% |
Different sectors have different advance rates, fees, and considerations. We work with lenders who specialise in each.
What to expect when applying for invoice factoring, and what documents you'll need.
5 minutes
Tell us about your business, turnover, and customers. We'll match you with suitable lenders and provide indicative terms.
1-2 days
Submit documents (see below). Lenders will credit check your customers and verify your business details.
3-7 days
Sign agreements, set up systems, and notify customers if required. Start uploading invoices for funding.
Everything you need to know about invoice factoring
50+
UK Factoring Companies
£2.4B+
Funding Arranged
10,000+
Businesses Helped
4.8/5
Customer Rating
Get a free, no-obligation quote in under 2 minutes. Compare rates from 50+ UK factoring companies based on your actual circumstances.