Invoice Factoring

Free up your time to manage your business

  • Receive up to 95% of invoice value
  • No need to chase payments
  • Fast, stress-free funding in 24 hours
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Proud to support Britain's Businesses
What is Factoring How it works Do I qualify Fees & Charges FAQs

What is invoice factoring?

Invoice factoring, also known as a debt factoring is perhaps the most widely used form of invoice finance available. You can access up to 95% of the cash tied up in invoices while clawing back some of your free time - as you don’t have to chase customer payments!

Invoice factoring is a flexible funding solution that enables you to effectively sell a single invoice or your whole sales ledger to a lender at a discounted rate. It’s time your business takes control of cash flow issues and waves goodbye to managing the credit control process.

Receive up to 95% of the value of your sales invoices

Receive up to 95% of the value of your sales invoices

This factoring solution allows you to release up to 95% of your invoice value in hours. A fast working capital boost to your business.

Focus on your business

Frees up your time

By outsourcing your credit control, it allows you to free up your time to manage and focus on your business.

Retain control of sales ledger

Reduce the risk of late payments

Giving up credit control to the financier will reduce the risk of bad debt and late payments. A dedicated team of professionals will manage collections on your behalf.

Improve your business cash flow

Improve cash flow

Cash is released as soon as your orders are invoiced and is made immediately available to you. This creates a smooth cash flow for your business.

No asset security required

No asset security required

There's no need to provide additional asset security. This is a significant advantage over other business loan products.

Bolt on extras

Bolt-on extras

There are other business additions available such as bad debt protection, payroll support, which helps to free up your time and protects your business from risk.

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Some of the funders we work with

Bibby Financial Services
Close Brothers Invoice Finance
Advantedge Commercial Finance
GapCap
Market Finance
Ultimate Finance

How does invoice factoring work?

Invoice Factoring is where financiers will purchase your invoice and collect the payments from your customers on your behalf. You will receive a large lump sum of the invoice value upfront, and then, once they have received payment from your customer, they will send you the remaining balance minus their fees and charges.

1
Invoice your clients as usual

Sell your products or services to business customers as usual and issue invoices with a 30 to 90-day payment term.

Invoice Finance Step 1 - Invoice your clients as usual
Invoice Finance Step 2 - Choose invoices to sell

2
Choose invoices to sell

Once your facility is set up you can choose a large portion of debtors or your entire sales ledger, sometimes known as ‘whole-turnover’ factoring to release cash against. The invoice financier will simply ‘buy’ the debt (providing it is within credit terms) that is owed by your customers.

Looking to sell just one invoice? If you just want to choose a single invoice or select multiple invoices to sell on an ad hoc basis, selective invoice factoring may be a better fit.

3
Receive up to 95% upfront

Receive an invoice advance up to 95% of the value of your sales invoices in 24 hours.

Example: If you have a £10,000 invoice, you could get up to £9,500 upfront to help improve your businesses cash flow.
Invoice Finance Step 3 - Receive  up to 95% upfront
Invoice Finance Step 4 - Customer pays the invoice

4
Provider collects invoice payments

The factoring company manages all credit control and takes responsibility for chasing payments, so you don't have too!

If you would prefer to manage and collect payments yourself, then CHOCCs factoring (Customer Handles Own Credit Control) is available, or an Invoice Discounting facility may be a better option.

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5
Receive final balance

You will then receive the remaining balance, minus any fees and charges agreed with the invoice finance provider.

Invoice Finance Step 5 - Receive final balance

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Do I qualify for invoice factoring?

If your business invoices other businesses for products and services, then you could qualify. With credit control being outsourced to the finance provider, factoring is most suited to smaller businesses who may not have the resource to manage this internally.

Regardless of sector, invoice factoring is suitable for the majority of UK SME businesses - from manufacturing and construction to recruitment agencies and wholesale. We’re confident that we can help you find the tailored funding solution your business needs to grow.

We can help businesses if they meet the following criteria:

You are a Limited company, LLP or sole trader

You have an annual turnover of £100,000 or more

Your business is based in the UK or Ireland

You sell to other businesses on payment terms

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What is the cost of invoice factoring?

Before diving headfirst into any business loan product, it’s important you first understand the costs associated with the product. Understanding the costs involved means you can weigh up whether your business can realistically afford this funding solution or whether there’s a better-suited product out there.

The cost of invoice factoring typically involves two main fees, a service fee and a factoring fee. It’s important to understand these fees can vary significantly from business to business - your industry sector, trading history, and how frequently you invoice can all have an impact. The cost will be made clear to you before you sign into an agreement.

The cost is made up of two fees. You will pay a...

Service Fee

Service Fee

This is the cost of having the facility and is calculated as a percentage of your gross turnover.

Discount Fee

Discount Fee

This is the cost of borrowing and is calculated as a percentage of the invoice value.

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SME invoice factoring

Why you should consider invoice factoring for your business

If you’re looking for a funding solution where you relinquish control over chasing payments and your entire credit control process - invoice factoring could be the perfect solution your business has been looking for!

Invoice factoring gives business owners, just like you, the opportunity - not only to access cash from invoices - but it gives you the gift of time. The time you used to spend managing your credit control process and hunting down clients for payment are long gone - leave all this administration to your new lender. You can focus instead on achieving your business goals without the hefty cash flow problems you were experiencing before invoice factoring.

Are you looking for cash unlocked from your invoices within 24-hours? Invoice factoring could be the correct funding choice for you.

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Grow your business quickly with an invoice factoring facility

With the financier taking the reigns when it comes to your whole sales ledger, this frees up your time and resources to carefully focus on your business’s needs. With invoice factoring, communications come directly from the lender, so your customer will understand that you have a relationship with a factoring company.

If you’d prefer a more confidential invoice finance service, read all about our invoice discounting facility.

Invoice factoring is the most common funding solution for SME businesses struggling with cash flow. Unlike many other forms of finance, invoice factoring is more secure because it is based on the company you have already invoiced out.

This means your business will see cash faster and also allows you to concentrate on running and growing your business!

  • Quick setup and easy process
  • Frees up your time to focus on the business
  • Improves your cash flow
  • Straightforward costs
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SME invoice factoring team

Invoice Factoring Frequently Asked Questions

Debt factoring is another term for invoice factoring. Debt factoring allows businesses to raise cash by selling their 'accounts receivables', in other words, their unpaid invoices, to a third-party provider.

When a business agrees to this arrangement, the credit control management will be the responsibility of the debt factoring company.

Using an invoice factoring facility can have many benefits for small and large businesses in the UK. One of the main advantages of factoring is that it helps combat short term cash flow issues. It does this by immediately releasing money tied up in outstanding invoices, freeing up your working capital.

There is one fundamental difference between recourse and non-recourse invoice factoring:

Recourse Factoring - This type of factoring agreement means that your business will be liable to pay back the invoice value should your customer fail to pay the lender.

Non-recourse Factoring - This agreement usually includes a type of bad debt protection that mitigates the risk of non-payment by your customers. It means that you will not be liable to pay the invoice value if your customer fails to pay.

No, invoice factoring is currently not regulated in the UK.

Yes! A selective spot factoring facility allows you to release funding against a single invoice or debtor when you need to. It’s flexible and can be used without signing lengthy contracts.

Yes, you can. Unlike traditional loans, lenders will look at your clients' creditworthiness, not your business credit history. So if you have bad credit, you will be eligible for invoice factoring.

CHOCCs (Customer Handles Own Credit Control) is also known as CHOCs (Customer Handles Own Collections), and it works the same way as an invoice factoring facility, but you handle credit control.

It can be described as a blend between factoring and discounting. With a factoring facility, the provider will manage credit control on your behalf, and any customer invoice payments are made directly to the provider. CHOCCs lets you manage and chase your customers, but invoice payments are still made direct to the factoring provider rather than you.

CHOCCs has many benefits, including the ability to maintain relationships and is especially great for young businesses that may not qualify for invoice discounting.

By using an invoice factoring broker like SME Invoice Finance, we can help save you time by matching your business to a range of suitable invoice factoring companies.

Apply now to get your free, no-obligation quote.

We help support UK businesses grow

Proud to support Britain's Businesses

Since 2014, we've helped many businesses, large and small, get access to the working capital they need through invoice financing.

Invoice factoring will suit the majority of UK SME sectors

We can help any UK business that invoices other companies on credit terms for the goods and services that they provide.

Get your free, tailored, no-obligation quote today

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