Are you a business owner looking for a solution to speed up the payment process from invoiced clients? If you need to streamline your cash flow and free up funds to help cover the costs of business operations, an invoice factoring company is one option.
There are lots of companies to choose from, so it's important to shop around to find the right one for your company.
To help with this, we have put together some of the best to choose from.
| Provider | Score | Details |
|---|---|---|
| 1. Bibby Financial Services | ★★★★★ | Click Here |
| 2. Aldermore Invoice Finance | ★★★★★ | Click Here |
| 3. Skipton Business Finance | ★★★★★ | Click Here |
| 4. Close Brothers Invoice Finance | ★★★★★ | Click Here |
| 5. SME Invoice Finance | ★★★★★ | Click Here |
| 6. ABC Finance | ★★★★★ | Click Here |
| 7. Pulse Cashflow Finance | ★★★★★ | Click Here |
| 8. ABN AMRO Commercial Finance | ★★★★★ | Click Here |
Invoice factoring: The pros and cons
We have listed the main advantages and drawbacks you might need to consider if you are thinking about using these services.
| Pros | Cons |
|---|---|
| ✔️ Easy and fast application process: Invoice finance providers vet your clients, not your company, leading to a streamlined application process. | ❌ Restrictions on services if your clients are not creditworthy: Services may be limited if your clients' creditworthiness is low. |
| ✔️ You are not liable for collecting payment: Liability shifts to the invoice factoring company, reducing your burden of collecting client payments. | ❌ Limited eligibility: You must use an invoicing system to access invoice factoring services. |
| ✔️ Suitable for companies with bad credit: Even with bad credit, you may be able to use invoice factoring to cover operational costs and scale your business. | ❌ Fees apply: There are fees associated with invoice factoring, including potential charges for services like wire transfers. |
Best invoice factoring companies
Some of the best companies for factoring invoices can help you with cash flow challenges, but which options are the best?
Check the list here to discover the best UK invoice factoring services and companies.
| Provider | Advance Rate | Service Fee |
|---|---|---|
| 1. Bibby Financial Services | Up to 100% | 0.5%-3.2% |
| 2. Aldermore Invoice Finance | Up to 90% | Varies |
| 3. Skipton Business Finance | Up to 90% | 2%-3.5% |
| 4. Close Brothers Invoice Finance | Up to 90% | 0.5%-2% |
| 5. SME Invoice Finance | Up to 95% | Varies |
| 6. ABC Finance | Up to 90% | 1%-5% |
| 7. Pulse Cashflow Finance | Up to 90% | Varies |
| 8. ABN AMRO Commercial Finance | Up to 95% | Varies |
1. Bibby Financial Services
Bibby Financial Services is a cashflow facilitator for businesses offering asset finance, foreign exchange, bad debt protection and many other services. Its invoice finance solutions are ideal, helping reduce customer payment collection burdens.
Their services will ensure that the transition between raising invoices and receiving payment for the invoice is smoother, meaning you receive the enhanced cash flow your business requires. They will also manage your sales ledger and use a service similar to a dedicated relationship manager to add a personal touch.
Your business is eligible for Bibby Financial Services if your company offers services or goods to other businesses, provides your clients with a credit term window of between 30 and 90 days and requires service to manage the credit control process for you.
Specifically, this financial services provider features a credit control team that can collect any unpaid invoices and enable your team to focus on growing your business and completing business operations.
You can also use their secure online portal, available at all hours of the day, to upload payment details. You will pay the fees you agree to for this service and have access to your cash within 24 hours.
Bibby Financial Services will offer you up to 95% of the invoice value, and once the customer pays them, you will receive the remaining funds (with their fees deducted).
| Advantages of Bibby Financial Services | Disadvantages of Bibby Financial Services |
|---|---|
| ✔️ Bibby Financial Services provides excellent customer service. | ❌️ The quality of the online portal could be improved. |
| ✔️ The company offers a seamless onboarding process. |
2. Aldermore Invoice Finance
Consisting of two companies, Aldermore Bank PLC and MotoNovo Finance Ltd, Aldermore has the financial expertise and knowledge to support your business with specific cash flow release services.
With Aldermore Invoice Finance, you can receive invoice factoring and credit control services and reduce the need to repeatedly ask customers to pay their outstanding invoices. Aldermore Invoice Finance will handle this process for you.
Whether you need to free up cash locked in unpaid invoices, lack a credit control department in-house or need a team of professionals to handle debt collection, this service can help you.
Aldermore will provide you with up to 90% of your owed funds from customers within 24 hours. It offers an online platform to help you manage your invoice uploading process, review funding availability and manage your facility.
Alongside these perks, you can also receive a dedicated relationship manager to support you with your invoice factoring requirements.
Their service works by releasing your funds when you send them your invoice. After this, they will focus on receiving payment for the invoice from your customer. When the customer pays the funds to Aldermore, they will pay you the remaining funds after deducting their fee.
Aldermore Invoice Finance states that factoring solutions are ideal if your business has an annual sales turnover of at least £750,000. Their flexible, transparent services match your specific business requirements.
| Advantages of Aldermore Invoice Finance | Disadvantages of Aldermore Invoice Finance |
|---|---|
| ✔️ Aldermore Invoice Finance offers helpful, dedicated relationship managers. | ❌️ Aldermore Invoice Finance has eligibility criteria requiring a turnover of £750,000. |
| ✔️ They provide annual reviews to ensure their service matches your business objectives. |
3. Skipton Business Finance
Skipton Business Finance offers multiple business finance solutions to UK businesses and comes with more than 20 years of business finance experience.
From invoice discounting and bad debt protection to recovery loan schemes and ledger support, the many services are geared towards freeing up cash flow. Among their many services is invoice factoring, an option that will free up 90% of your unpaid invoice value almost instantly.
This invoice factoring company will chase up customer payments for you and provide a credit control function to make receiving funds easy. You have the option to entrust free customer credit report services to Skipton Business Finance.
In addition to these services, you will have a dedicated relationship manager who knows your business well and will support you in making successful decisions.
Skipton Business Finance's invoice factoring process works like this. You offer services or goods to clients and invoice them for this work. You notify Skipton when you raise an invoice, and they will pay an advance to your company.
This invoice factoring company will receive payments in a bank account that they control and provide you with the remaining balance. They will deduct a service fee that you agree to.
| Advantages of Skipton Business Finance | Disadvantages of Skipton Business Finance |
|---|---|
| ✔️ Skipton Business Finance offers a personal service through their dedicated relationship managers. | ❌️ Their assessment process may be longer than a few alternatives. |
| ✔️ They offer a simple platform to help you manage your invoice financing services. |
4. Close Brothers Invoice Finance
Close Brothers Invoice Finance is one of the best invoice finance companies with awards to prove it. It won a Best Factoring and Invoice Discounting Provider award in 2022 and offers an experienced team of over 3,700 professionals.
Among Close Brothers Invoice Finance's services are asset-based lending, invoice discounting and invoice factoring.
This company states that you must have a projected turnover of more than £750,000 to use their services. It's also suitable if your invoices fall into the business-to-business category and you want to invoice many of your invoices instead of a select few.
Their specific invoice factoring service is comprehensive. Close Brothers Invoice Finance will complete this to help you reduce timely payment chasing processes. It will release up to 90% in advance for your invoice value and then work to receive payment from the client.
When your clients settle the unpaid invoice, this invoice factoring provider will pay the remaining balance. They will deduct their fee from the funds.
Their dedicated relationship manager and online account make viewing your facility at any time simple. They also offer discreet services similar to confidential invoice discounting, meaning your clients will not know you are using an invoice financing service.
On their website, this service provides an invoice finance calculator. You can use this tool to learn the amount of cash you can release from invoices your clients have not paid.
| Advantages of Close Brothers Invoice Finance | Disadvantages of Close Brothers Invoice Finance |
|---|---|
| ✔️ Close Brothers Invoice Finance provides industry-best technology for you to easily reconcile payments. | ❌️ Close Brothers Invoice Finance has an eligibility criteria of an annual turnover of £750,000. |
| ✔️ They offer a discreet service so your clients will not know you are using an invoice factoring company. |
5. SME Invoice Finance
Founded in 2014, SME Invoice Finance has supported thousands of companies, including large and small businesses, and facilitated cash flow challenges. It delivers several services, such as trade finance, invoice discounting and invoice factoring.
With their invoice factoring services, your business can immediately receive 95% of the invoice value without chasing payments. You will get your funds within 24 hours.
The flexibility of SME Invoice Finance sets it apart from other services. You have the option to sell just one invoice from time to time or commit your entire sales ledger to their lenders and reap the rewards of a discounted rate.
Your business is eligible for invoice factoring from SME Invoice Finance if it uses invoices to bill other businesses for your goods and services. Whether you are a sole trader, a limited company, have an annual turnover of at least £100,000 and are based in the United Kingdom or Ireland, you can use their service.
You must pay two fees to use this service, including service fees and factoring fees. The service fees from SME Invoice Finance refer to the costs of having an invoice factoring facility. In contrast, the factoring fees refer to costs linked to borrowing funds from the invoice factoring company.
| Advantages of SME Invoice Finance | Disadvantages of SME Invoice Finance |
|---|---|
| ✔️ SME Invoice Finance offers the chance to factor single invoices or your whole ledger. | ❌️ Their services are specifically geared to small businesses. |
| ✔️ Their services are suitable for a range of business sectors, such as manufacturing and recruitment agencies. |
6. ABC Finance
Founded in the year 2000, ABC Finance offers invoice finance services businesses. From sole traders to limited companies to PLCs, the selection of company types this invoice factoring company supports is large.
ABC Finance will provide a few benefits when you select their service. For example, you can select the specific invoices you want to finance with their spot factoring feature and receive 90% of the invoice value immediately and the remaining balance later to improve cash flow without any long-term contracts.
You can also use their invoice factoring feature to get paid between 80% and 90% of the invoice value immediately and the remaining balance when the client pays their invoice.
The process for invoice financing with ABC Finance involves selecting an invoice and selling it, after which ABC Finance will chase the customer for payment. When the customer pays the balance into the trust account, the finance company will deduct fees and pay you the remainder.
| Advantages of ABC Finance | Disadvantages of ABC Finance |
|---|---|
| ✔️ ABC Finance offers excellent customer service. | ❌️ ABC Finance lacks the range of customer reviews other providers have received. |
| ✔️ They support a range of businesses, including sole traders and limited companies. |
7. Pulse Cashflow Finance
Pulse Cashflow Finance was founded in 2010 and offers asset-based lending experience plus trade finance, invoice discounting and invoice finance solutions to various businesses. Their invoice finance solutions contribute to business growth and work to provide up to 90% of the invoice value before your client pays.
This invoice factoring solution includes credit control and sales ledger management services, meaning you have the liberty to manage your business and eliminate any in-house credit management costs.
Pulse Cashflow Finance is one of the providers that offers confidential invoice discounting solutions for a transparent fee, meaning your clients will not know you have selected this service.
There are a few eligibility requirements with Pulse Cashflow Finance. Your business should have a projected income of at least £350,000 in the first year. Alternatively, if you are a firm that trades with other businesses, you can also solicit the invoice finance solutions of Pulse Cashflow Finance.
This provider will charge you a couple of fees. You will need to pay the cost of finance and the service fee. While the finance cost is a specific agreed percentage, the service fee is a set percentage of your company's yearly turnover.
| Advantages of Pulse Cashflow Finance | Disadvantages of Pulse Cashflow Finance |
|---|---|
| ✔️ Pulse Cashflow Finance supports startups and limited companies in the UK. | ❌️ Pulse Cashflow Finance lacks the range of online reviews that other providers have received. |
| ✔️ They offer tailored solutions such as funding or credit control services bundled with the funding. |
8. ABN AMRO Commercial Finance
Some of ABN AMRO Commercial Finance's services include invoice discounting, bad debt protection, asset-based lending and loan recovery. They also provide invoice financing services to give you instant access to the working capital you have earned.
This provider will offer 95% of your invoice value immediately, meaning you will not need to wait up to three months to receive payment.
As part of their service, ABN AMRO will offer a dedicated credit control option to help you stay on top of outstanding payments and customer creditworthiness.
Additional features include a client portal to access an account anytime. You can also access a dedicated relationship manager and flexible finance services tailored to your specific business requirements, even as they change.
This factoring service typically works with established businesses that need to raise working capital.
| Advantages of ABN AMRO Commercial Finance | Disadvantages of ABN AMRO Commercial Finance |
|---|---|
| ✔️ ABN AMRO Commercial Finance supports a range of businesses. | ❌️ ABN AMRO Commercial Finance lacks the range of reviews other invoice factoring companies have received. |
| ✔️ This service offers a dedicated relationship manager who understands how your business works. |
What are invoice factoring companies?
Invoice factoring services and companies in the UK offer businesses funds in exchange for outstanding invoices.
In other words, this process applies to invoices that your customers have not yet paid. They allow you to improve your cash flow so you're not short when you're waiting for payments.
Invoice factoring is not ideal for every industry and can be costly for some businesses, but its main advantage is that it speeds up the payment process.
Invoice factoring differs from invoice discounting. An invoice discounting provider works with a loan against outstanding invoices, while invoice factoring involves a process where companies purchase the invoices outright.
The total client sales volumes from invoice financing in the United Kingdom reached £69bn in 2018, proving that many companies have been able to free up funds using these services.
How do invoice factoring companies work?
When your business performs work for a client, and you send them an invoice, you may not receive payment as quickly as you hope. Invoice factoring services work when you select the invoices you would like to borrow against and apply to an invoice factoring company.
Once you have applied, the invoice factoring company will review your clients' creditworthiness. They will check whether the client's history indicates they have paid their previous invoices.
If the invoice company approves it, they will pay your company an advance from the invoice value your client owes you. This advance is typically around 80% of the value but can be higher.
You can use the advance for your requirements, such as equipment. What the invoice finance companies then do is to collect the money from your client. When they receive payment from your client, they pay the remaining funds into your British business bank.
Essentially, what you pay for is a more efficient way to collect owed money from clients, so the invoice finance provider will collect fees and interest on the borrowed amount you solicit from the invoice. Other fees may also apply if your client pays the invoice late or their cheque does not clear.
The main features of invoice factoring companies
Invoice factoring services and companies offer multiple handy features your business can use.
Here are the four main features you should look for when selecting one.
- Credit control service — Companies that offer invoice factoring services use credit control features and credit checks to determine your client's ability to pay the invoice. They also keep an eye on the credit limits of your clients.
- Dedicated relationship manager — Many companies that offer invoice factoring provide a dedicated relationship manager to support your company as it navigates the factoring process. This dedicated relationship manager will offer support tailored to your company and answer any queries.
- Online reporting features — If you need to access or review your company's account information in real-time, you can do this with many invoice factoring companies. Some of the main features the online reporting tools provide are invoice details, information about funding and facts about transactions, which you can easily access through an app.
- Competitive advance rates — Most companies that offer invoice factoring services provide you with competitive advance rates. These rates will vary from company to company, so it's worth looking at a few to compare them.
The verdict
Invoice factoring companies can help your company access funds faster and take the pressure off you to chase clients for the money they owe. If you want to use an invoice factoring company, some of the best options, include Close Brothers Group and Aldermore Group.
Since every company that offers invoice factoring is unique, arranging a consultation or contacting the services you are interested in is beneficial. With this approach, you will easily select a provider that offers tailored support for your business.
But remember to consider your business's needs and status before choosing one. They don't work for every company and they can be expensive.
