UK factoring firms

Many SME firms consider a factoring facility to raise capital for short-term or ongoing needs. A factoring firm buys a business’s outstanding invoices, and gives then business a percentage of what it is owed up front (usually up to 85-90%). The factoring firm then collects the full amount of the unpaid invoice from customers and pays the business the balance it is due.

• No credit checks are needed with factoring since the factoring firm effectively assumes the credit evaluation risk of customer that owe the outstanding amount on the invoice.
• A firm would consider factoring when business cashflow options may not be available or not timely for firm requirement.
• Up to 90% of an invoice value is available as an advance to most firms on an unpaid invoice. Please note that this advance percentage may vary due to account risk, industry, and factoring firm.
• The factoring fee charged by the factoring firm for the factoring facility may also vary by actual risk in the account, industry, and/or factor firm.
• Some factoring firm’s facilities may either be ‘recourse or non-recourse’. This means some business owners may need to consider credit insurance or personal guarantees in the event of a customer not paying a factoring firm.

Please note that factoring is an excellent source of funds that can enable a firm to grow. The factoring helpline will assess a firm’s individual needs and requirements including a focused evaluation of all actual or potential advantages versus the disadvantages & costs of factoring.