Debt factoring is selling your invoices to a third party, i.e. a factoring company.

In return they will process the invoices and allow you to draw early payments in cash against the money owed to your business.

You get cash quickly, and don’t have to collect the debt. The factors fee is taken from the value of the invoice.

It is commonly used by businesses to improve cash flow and can also be used to save costs by avoiding the need to employ credit controllers.

Businesses that supply this service are called factors or debt factoring companies.

The factoring company gets the debt and has to collect it.

How much money could I raise from debt factoring?

With outstanding unpaid sales invoices of £240,000 you could receive an initial cash injection of over £200,000.

A debt factoring company will provide you with invoice finance of up to 95% (this may be 100% in some cases) of the value of your outstanding sales invoices. You can then use that cash to fund further growth and expansion.

The factor will then continue to provide you with up to 95% of the value of new sales invoices, normally within 24 hours of you raising them.

The remaining 5% of each invoice will be passed onto you by the factoring company when the customer pays (the customer does not need to know of the factoring companies involvement).

Why use debt factoring?

You can use factoring to:

• Get money quickly
• Avoid the hassle of collecting outstanding sales invoices
• Smooth your cash flow
• Borrow money, secured by your outstanding sales invoices

Who can help?

We offer a UK wide free independent quotation search service for factoring.

In many cases they have saved clients at least 33% of the cost of their existing or quoted invoice finance facility.