Q: What is invoice factoring?

Invoice factoring is a financial service where businesses sell their unpaid invoices to a factoring company. This allows them to receive immediate cash flow without waiting for clients to pay, helping manage operational expenses and working capital needs.

Q: How does invoice factoring work?

Invoice factoring works by submitting your outstanding invoices to a factoring provider. The provider advances a percentage of the invoice value (usually 80-90%). Once your client pays the invoice, the remaining balance is paid to you minus a small factoring fee.

Q: What are the benefits of invoice factoring?

Benefits of invoice factoring include improved cash flow, faster access to funds, reduced payment delays, and no need for traditional loans. It helps businesses manage growth, cover expenses, and avoid cash flow gaps caused by slow-paying customers.

Q: Is invoice factoring suitable for small businesses?

Yes, invoice factoring is ideal for small and medium-sized enterprises (SMEs) that invoice other businesses on credit terms. It is especially helpful for businesses with cash flow challenges or those experiencing rapid growth but facing payment delays.

Q: What is the difference between invoice factoring and invoice discounting?

Invoice factoring involves selling your invoices to a factoring company, which then manages credit control and collections. Invoice discounting, however, allows you to borrow against unpaid invoices while retaining responsibility for collections and customer relationships.

What is Invoice Factoring?

Invoice factoring (also called invoice finance) allows you to unlock a significant portion of the value of your unpaid invoices immediately, rather than waiting for your customers to pay. We act as your broker to match you with lenders who then advance funds against your sales ledger.

How does Invoice Factoring Work?

Raise an invoice as normal when you make your sale
Copy the invoice over to your funder or factoring company
They’ll quickly verify the invoice before paying you up to 90% of the invoice total – instantly
By boosting your cash flow this helps you to pay bills, invest in stock and expand your business
Cut down the time you spend on credit control

Benefits & Flexibility

1. Cash when you need it – Convert unpaid invoices into working capital within days.

2. Keep control – Funding is based on your sales, not tied to fixed assets or property.

3. Grows with your business – Access more funding automatically as your turnover rises.

4. Stay focused – Free up time while we handle lender matching, setup, and ongoing support.

5. Confidence in your customers – Facilities often include credit checks and debtor management.

6. Ready for any climate – A flexible funding line that adapts to both busy and quieter periods.

Who It’s For

Ideal for:

• Businesses that invoice other businesses (B2B)
• Companies looking to unlock cash tied up in unpaid invoices
• Fast-growing firms that need flexible funding as sales increase
• Businesses engaged in international trade that need funding against overseas invoices

You might not qualify if:

• Your customers are mainly consumers (B2C)
• Your invoices are frequently disputed or unpaid
• Your business has minimal trading history or turnover

Popular Factoring Options

Frequently Asked Questions

What is the difference between factoring and invoice discounting?

The differences between invoice factoring and invoice discounting are nuanced but essentially factoring includes credit control and collections handled by the lender, while discounting lets you manage your own debtor payments.

What rates and fees apply?

Fees vary by lender, industry, and turnover, but most charge a small service fee plus interest on funds advanced.

Will my customers know I’m using factoring?

In most cases, yes — the lender collects payments directly. If confidentiality matters, invoice discounting may suit you better.

Can startups / new businesses qualify?

Yes, some lenders support new or fast-growing businesses if they invoice other companies (B2B).

What happens if a debtor doesn’t pay / defaults?

It depends on the agreement — some facilities include bad debt protection, others require you to repay the advance.

Can I switch lenders later?

Yes, most agreements allow switching once your notice period ends. A broker can help you find a better fit.

Do I need to provide security / personal guarantee?

Usually not — invoices act as the main security. Some lenders may request a personal guarantee depending on risk.

What types of invoice finance are available to small businesses?

Small businesses can use invoice factoring, invoice discounting or selective invoice finance. The most suitable option depends on whether the business wants help with credit control, prefers to manage collections internally or only needs funding against selected invoices.

Is invoice factoring suitable for small businesses?

Invoice factoring can suit businesses that regularly invoice other businesses and experience delays between completing work and receiving payment. It can help provide more predictable working capital.

How can small businesses use invoice factoring?

Released funds can be used to cover payroll, pay suppliers, purchase stock or materials and support business growth while customers are still paying their invoices.

What does a small business need to qualify for invoice factoring?

Eligibility usually depends on having valid business-to-business invoices, reliable customers and invoices that are not disputed. The funder will also review the business’s turnover and invoicing history.

How do you set up invoice factoring in steps?