Compare Invoice Factoring

Sending a normal invoice means creating it, forwarding it to your client, and waiting as long as 90 days to be paid. In some cases, you might spend hours reminding the client to pay, sending emails, and following up to ensure that they have the information they need. You also won't likely receive anything for your invoice for weeks or months depending on the client.

With invoice factoring, you create your invoice, forward it to your factoring company, and they pay you an agreed % of that invoice immediately. You'll also save time, because you won't have to follow up on every invoice. The factoring company will do that for you.

In most cases, you'll be able to choose between two types of invoice factoring:

Recourse – Recourse invoice factoring is the most common type of factoring, and the most affordable. Here, you agree to pay back any invoices that are not paid. If the factoring company isn't paid, you reimburse the funds they paid you.

Non-Recourse – Non-recourse invoice factoring costs more per invoice, but protects you in case the client does not pay. In this case, your agreement states that if the client does not pay, the factoring company absorbs the costs, and you keep the pre-payment they sent you.

In most cases, invoice factoring allows you to simply forward your invoice to the factoring company, and allow them to handle collection. They will pay you an agreed % of the invoice, and the client will pay the factoring company directly, usually with your name on it.

Spot Factoring – In some cases, your invoice supplier may offer a service called Spot Factoring. Spot factoring allows you to choose which invoices you would like to factor on a case-by-case basis, so that you can save on invoices you don't need upfront or when you know they will pay in a timely manner. However, you will likely pay more per invoice.

Invoice Discounting allows you to free up your assets by boosting cash flow with accelerated receipts of your sales ledger. Unlike with invoice factoring, you still handle invoice collection in-house, but the invoice finance company will forward you part or all the invoice in advance, so that you can use it to invest in your business.

Invoice discounting is usually very affordable with rates starting as low as 0.1%, but it does require that you handle invoice management yourself. If you have the means to set up accounts receivable, invoice discounting can help you by paying invoices in as little as 24 hours. Because invoice discounting is significantly more flexible than overdrafts and loans, this option will support business growth.

Invoice financing costs will depend on the type of finance you choose and invoice volume. For example, in most cases, invoice discounting will start as low as 0.5%.

Full invoice factoring, with non-payment protection, is more expensive. This allows you to get up to 90% of the total invoice upfront, without waiting for the client to pay, and without worrying about whether they will pay.

In most cases, you will have to consider these costs:

Invoice factoring can be a good thing for businesses of all sizes for several reasons, however it may not be right for you. It's important to learn your options and make the best decision for your business.

Cash Flow – The primary benefit of invoice factoring is speeding up cash flow, so that you can own and invest your accounts receivable as quickly as possible. This can help you to meet bills, can help you to invest in your business more quickly. There are numerous reasons to need improved cash flow, and invoice finance can help. With advances up to 100% and low interest rates, invoice finance can help you to get cash quickly without debt.

Reduced Time Expenditure – Handling accounts payable or accounts receivable can be time consuming, which can be costlier than simply forwarding your invoices in exchange for a percentage of the invoice. If your time is more valuable than the cost, invoice factoring may be worth it just for this feature.

Payment Terms – Invoice factoring can allow you to confidently extend longer payment terms to clients. A non-recourse factoring service protects you even if the client is unable to pay, allowing you to safely extend payment terms to meet those offered by larger businesses.

Invoice factoring is a great choice for many businesses, but if you are considering it, you do have to make sure that you get a competitive factoring or discount rate. Use our free comparison service to check and compare quotes from some of the top factoring companies in your area, to see which offers the most suitable deal and the most value for your money. Just tell us what you need, and we'll help you compare quotes.

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