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.

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.

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.

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.

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.

Invoice Factoring for Start-ups & Small Businesses

Why Invoice Finance Works for Small Businesses

• You invoice a trustworthy customer, yet you’re being paid only when they pay you. That leaves you funding that gap

• Invoice finance gives you early access to the value of those invoices, improving cash flow and reducing risk

• Flexibility: you fund individual invoices as you issue them; you aren’t locked in for lengthy terms

• Unlike many traditional loans, repayment comes from your invoice income rather than a fixed monthly payment regardless of cash flow

• Especially useful for start-ups/small businesses whose growth is constrained by slow payment cycles

Benefits of factoring for Small Businesses

Instant cash flow – get paid early
Growth enabled
Reduced risk of late payment
Flexible use of funds
No long-term debt burden

How It Works With Us at Simply Factoring Brokers

1. Apply & Qualify – we evaluate your business (past invoice history, debtor quality, sector)

2. Select Invoices – you choose which invoices you want to fund

3. Get Advance – we advance you a large proportion of the invoice value (typically 90%)

4. Customer Pays – your customer pays us (or you, depending on the model)

5. Balance Released – when payment is received, we release the remainder minus our fees

6. Repeat – you can continue the facility as your business issues invoices

Eligibility & What We Look For

Invoices to established businesses, rather than very high-risk clients
Minimum trading period
Clients with good credit / low risk of non-payment
Transparent bookkeeping, clear debtor aging
Start-ups – The stronger your debtor profile, the better terms we can secure

Costs & Fees

We charge a factoring fee, typically expressed as a percentage of invoice value plus a service fee (or periodic fee).

Example: If you invoice £10,000 and we advance £8,000, then when payment arrives we release the remaining £2,000 less our fees.

Because repayments are tied to invoice payments, if your debtor pays late you aren’t paying a fixed monthly repayment regardless of cash flow.

Why Choose Simply Factoring Brokers?

1. Specialist in Start-ups & Small Business – we understand young business cash-flow dynamics

2. Fast Decision Making – we aim to get you a yes/no quickly so you don’t wait

3. Tailored Options – we compare factoring vs discounting to find the best fit for you

4. Transparent Advice – we explain what’s best for your business and what the costs are

5. Trusted Network – we work with proven funders and negotiate on your behalf

How to Get Started

1. Contact us for an initial chat

2. Provide us with your recent invoice book / debtor aging / trading history.

3. We’ll assess and propose the best facility for you.

Once approved, select your first invoices and begin unlocking cash.

Call for invoice factoring services
Fund Your Business Today – Call 0333 772 1558 to release funds tied up in your invoices

FAQs About Startup / Small Business Factoring

What is the minimum invoice size for invoice finance?

It varies by funder and your business profile. We will work with you to understand what is realistic given your size and sector.

Does invoice finance affect my credit rating?

Generally not in the same way as a loan. In many cases, especially invoice discounting, the funder’s advance is secured solely by the debtor and your business performance. We will review the specific funder’s terms with you.

How long does it take to get the cash?

Once approved and your invoices are selected, many advances can be made within a day or two. The faster your debtor pays, the faster the remaining balance is released.

Do I have to use all my invoices?

No. One key benefit is flexibility: you may select the invoices you wish to finance, and you are not forced to use every one.

What happens if my customer doesn’t pay?

It depends on the facility type (factoring vs discounting). As your broker we will ensure you are clear on risk allocation. We also help you choose debtors and credit-worthy clients to minimise risk.

Is this suitable for very early stage start-ups with minimal trading history?

Yes, but your options may be more limited and the cost higher. If you’re very early stage, we’ll assess your invoice/debtor profile carefully and may recommend alternative funding or combine invoice finance with other cash-flow solutions.