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Invoice Factoring - Get a Quote Today
Invoice Factoring is when a business sells its unpaid invoices to a company that pays them right away, helping the business get cash faster instead of waiting for customers to pay. If you want to speed up your cash flow, invoice factoring could be a great option to explore!
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- Loan disbursed within 24 hours
- No additional charges for early repayment
What are the benefits of Invoice Factoring?
Invoice factoring is a financial transaction in which a business sells its accounts receivable to a third party (factor) at a discount. This helps businesses improve their cash flow by providing immediate access to funds, allowing them to invest, pay suppliers, and cover urgent expenses without waiting for customer payments. It's particularly beneficial for small and medium enterprises facing cash flow challenges and helps in simplifying the accounts receivable process.
Improved cash flow
Faster payments
Reduced collection efforts
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What are the different types of Invoice Factoring?
Recourse Factoring
The client remains responsible if the customer fails to pay the invoice.
Non-Recourse Factoring
The factor assumes the credit risk if the customer doesn't pay the invoice.
Maturity Factoring
Payment to the client is made on a set maturity date, regardless of when the customer pays.
What is Invoice Factoring?
What Is Invoice Factoring?
Invoice factoring is a financial arrangement where a business sells its unpaid invoices to a third-party company, called a factor. The factor pays the business a large portion of the invoice upfront, helping the business get cash quickly instead of waiting for customers to pay.
Types of Invoice Factoring: Recourse vs. Non-Recourse
The factor typically pays 70%-90% of the invoice value upfront. Once the customer pays the invoice, the factor gives the remaining balance to the business, minus a small fee (usually 2%-5%). The factor also handles collecting the payment from the customer.
Types of Invoice Factoring: Recourse vs. Non-Recourse
There are two main types of invoice factoring. In recourse factoring, the business must buy back the invoice if the customer doesn’t pay. In non-recourse factoring, the factor accepts the loss if the customer fails to pay, usually for a higher fee because it’s riskier for the factor.
Real Scenarios
Construction Company Needing Fast Working Capital
Situation
A construction firm had a short-term cash gap before a large invoice was paid and needed £85,000 to cover materials and payroll.
Challenge
Traditional bank applications were too slow; they needed a decision and funds within days.
Outcome
Funding Agent matched them with a lender; they received a working capital facility and bridged the gap until the invoice was paid.
Ecommerce Business Preparing for Peak Season
Situation
An online retailer needed around £120,000 to stock up ahead of Black Friday and the Christmas rush.
Challenge
They wanted flexible terms and a quick turnaround so stock could be ordered in time.
Outcome
Through Funding Agent they secured a facility, placed orders in time and managed peak demand without cash flow stress.
Marketing Agency Using Invoice Finance
Situation
A marketing agency had strong clients and reliable invoices but often waited 60–90 days for payment.
Challenge
They needed to unlock cash tied up in unpaid invoices to pay staff and take on new projects.
Outcome
Funding Agent connected them with an invoice finance provider; they now access funds against approved invoices and smooth out cash flow.
Property Developer Using Bridging Finance
Situation
A developer needed short-term finance to complete a purchase before selling an existing property.
Challenge
They required a fast decision and flexible terms to align with the sale timeline.
Outcome
Funding Agent matched them with a bridging lender; they completed the purchase and repaid the facility when the sale completed.
FAQ’S
How does invoice factoring help recruitment agencies?
Is invoice factoring suitable for engineering firms?
Can construction companies use invoice factoring for contract work?
Why do wholesalers use invoice factoring?
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