02Solutions
Invoice factoring
With factoring, the provider advances funds against eligible invoices and commonly takes on the collection of those invoices. Customers will usually be aware that a facility is in place.
At a glance
- Provider may manage or support the sales ledger and credit control.
- Customers are commonly notified and pay the provider directly.
- Often considered by businesses without a dedicated credit control function.
01
What changes day to day
Under a factoring facility, the business continues to raise invoices as normal. Those invoices are assigned to the provider, which advances an agreed proportion of their value and then manages collection from the customer.
For some businesses the collections support is the main attraction. Credit control is a job, and in a growing business it is often being done by the owner in the evening. Handing that to a provider can be as valuable as the funding itself.
02
Disclosure
Factoring is usually a disclosed arrangement. Customers are typically asked to pay the provider rather than the business, and invoices commonly carry an assignment notice.
How customers react to this varies by sector. In industries where invoice finance is common, it is unremarkable. Where it is unusual, it is worth thinking through before committing. This is the kind of question we work through with a business before approaching providers.
03
What we help with
We help businesses understand whether factoring is the right structure for their ledger and their customers, identify providers whose approach to collections fits the business, and compare terms on a like-for-like basis.
Typically suits
- Smaller or growing businesses without in-house credit control
- Businesses where chasing invoices is taking time from the work itself
- Ledgers with a reasonable spread of business customers
Worth considering
- Customers will typically know a third party is involved in collections
- The provider’s approach to collections becomes part of the customer relationship
- Service fees generally reflect the credit control work being undertaken
Providers apply their own eligibility criteria and set their own terms. The points above describe how facilities of this kind commonly operate and are not a guarantee of what any provider will offer.
Other structures
04Next
Start with a conversation.
No application form, no obligation. Tell us about the business and the requirement, and we will tell you honestly whether invoice finance is worth exploring.
What happens when you get in touch
- 01A short conversation about the business, its customers and how it invoices.
- 02We work out whether invoice finance is a realistic fit, and which structure.
- 03If it is, we outline the options and the providers worth approaching. If it is not, we say so.