The factoring market is a very competitive market that has led to many innovative features. When discussing your needs with a factor you should since which of the following options they can offer and see if the service makes sense.

Non-Recourse Debt: If a customer defaults on their debt the factor has the right to reclaim the amount they advanced to you for that invoice. Many factors offer an additional service that guarantees payment for your invoices. In other words, you get paid for what you invoice. This feature is call non-recourse debt and/or bad debt protection. To offer this service the factor will usually charge you an additional service charge. For larger companies (e.g. turnover over £1,000,000) some factors will allow you to apply this feature to a few select customers.

Confidential Factoring: Usually when a factor sends your invoice, the invoice clearly indicates whom they are sending the payment to (the factor) and that you have outsourced this function. With confidential factoring, everything appears to be handled by you and the factors name does not appear on the invoices. Once again there will be an additional service charge for this feature.

Partial Factoring: For companies with a significant turnover (e.g. over £1,000,000) and several large clients, some factors will allow you to only outsource a portion of your invoices.

Invoice Discounting: Companies with over £750,000 turnover are eligible for invoice discounting. Invoice discounting is similar to factoring in that you can get an advance on your invoices but unlike factoring you still handle the invoice process. The main benefit is that there is a smaller service charge and if you have already built a robust sales ledger management system you can continue to use it.