The factoring or invoice discounting service fee will vary according to the risk and work associated with your accounts receivables. Your fee will be lower if you have several well-established clients who you invoice regularly.

The number of invoices you issue a month, the concentration of sales (percent of your business one client accounts for), and your turn over will all affect the service fee you pay. The service charge usually ranges from 0.5% to 3.0% of your turnover. Since all factoring companies have a minimum annual charge for their service, the service fee for companies with smaller turnover may be higher than 3.0%. (We do not recommend factoring for companies with less than £50,000 turnover).

You will also have to pay interest on your cash advances. The interest rate is typically between 1.5% to 3.0% above the current base rate. The factoring company will usually require 5 to 7 days to set up your account and process your initial factoring transaction. Once your account has been set up, most factors can provide cash to you with in 24 hours of you raising a qualified invoice.