Compare Invoice Factoring
Plan and run your business more effectively with peace of mind.
Access flexible invoice factoring options to suit your business requirements.
Find the best rates & services on the market with our comparison tool.
Collecting money from customers can place a huge strain on any business. On average, small businesses are chasing £4,619 in court and the number of county court judgements lodged by small and medium-sized businesses (SMEs) recently increased by 23 per cent in the space of three months.
Don’t let recovering overdue money become a costly exercise. At Cost Compare Limited, we are here to make sure this task is as stress-free as possible, so that it doesn’t take away valuable resources from businesses that are often too small to manage the burden.
How Can Invoice Factoring Help?
In an ideal world, customers would commit to paying invoices for your services instantly. However, this isn’t always possible, so money ends up being held by your customers often for several months after the services have been carried out. But there is a solution to this problem – invoice factoring. Invoice factoring is when a company effectively sells its outstanding invoices to another company. This sale price could typically be around 90 per cent of the total value of the amount outstanding. That factoring company then owns the debt and will apply its own methods to retrieve it.
We have an invoice factoring comparison tool that can help you find the right company to manage your invoices.
It’s not only severely overdue invoices that are eligible for factoring – many businesses choose to use factoring as a means of collecting regular invoices. Often, businesses have vast amounts of capital sitting in unpaid invoices – even those that are not overdue. Factoring enables businesses to free up that working capital and get earlier access to payment – just at a slightly discounted rate.
Some businesses – particularly larger, corporate companies – have a standard 90 day policy for paying their suppliers. Often, you can agree payment terms upfront before undertaking any services for a company, but at other times you may find yourself with no choice but to accept this lengthy wait. Don’t wait to be paid – use our comparison tool today to find out how you could benefit from factoring.
Find The Best Invoice Factoring For Your Business
Luckily, there are a wide range of invoice factoring companies in the UK that are willing to buy a variety of unpaid invoices from companies – from recent invoices to those that have are significantly overdue. Our useful comparison tool will compare different invoice factoring companies and the amounts they would charge your business to purchase your outstanding debt. Using these invoice companies will reduce the amount of lost income that you would otherwise have received from unpaid invoices.
Choose the right company for you
Many companies offer factoring and discounting services to help you run your business and increase your profits. These companies range from small independent invoice finance companies and collection agencies, to the large high street banks – most of which will offer to buy your unpaid invoices from day one after they have been issued to customers.
The bank or factoring company will then have the responsibility to collect the money owed. If you run a small business that does not have the luxury of a large finance department, this service can also provide valuable credit control support, meaning that you have more time to concentrate on running your business.
If you choose to sell your invoices to one of the larger high street banks, their service to you can start on day one of the invoice process. You would typically provide details of the invoice and customer to your factoring company or bank. You then send your invoice to your customer on day one, clearly marking your payment terms. On day two, the bank will usually pay you anything up to 90 per cent of the value of the invoice.
You will then have access to that cash immediately. The amount that the bank pays for the invoice depends on a number of factors, such as the profile of the customer, the customer credit score and the amount of the invoice. After this, you can use your funds to support your business.
Whoever you choose for invoice factoring for your business, make sure that it is a reputable company. At Cost Compare Limited, we compare registered companies. Many companies that offer invoice factoring or discounting as a service are registered with the Asset Based Finance Association (ABFA). The association lists more than 300 financial institutions in the United Kingdom and Ireland that offer these types of services and provides non-biased information on the companies and their trade.
Benefits Of Invoice Finance
There are many benefits of using invoice finance and factoring when running a business:
– As mentioned already, you will have almost immediate access to the funds that are owed to you, without waiting long periods for payment. While the factoring company or bank takes a fee for the service provided, this fee will often work out more cost effective than your business having to chase invoices.
– Having instant access to funds can also often prevent the need to take out a business loan – which would no doubt be more expensive than the fees taken to collect an invoice.
– Invoice finance factoring can also take the hassle out of credit control. Often, the stress of having to make awkward phone calls chasing money can put a massive strain on many small business owners. Credit control is effectively taken care of, so that business owners can be rest assured that their accounts are being handled in a sensitive, professional and efficient manner.
– You will also have the freedom to pay your own suppliers quicker. This often leads to a more efficient service from them and a healthier working relationship. In addition, you will be in a stronger position to negotiate better rates in return for early payment.
Invoice Factoring UK
Whether you choose to use a dedicated invoice factoring company or you opt for the services of a larger high street bank, you will have access to a dedicated support team for all your invoicing requirements. Some small businesses often find that this is effectively an extension of the team – like having their own credit control division.
Outsourcing invoice collection is one of the most effective ways to free up valuable management time and take away the burden of chasing funds. This client support team would be comprised of experienced professionals that are highly knowledgeable as to the best ways to obtain funds from your customers on time.
Success with obtaining funds from the first invoice will also ultimately ensure that payments are made on time from that customer going forward – ensuring that you develop a reliable and trouble-free client base when it comes to invoice finance.
Is My Business Eligible For Invoice Factoring?
Whether or not your business is eligible for invoice factoring UK services will vary from institution to institution – each will have its own terms and conditions. Our website will help guide you to companies that match the criteria of your business.
Some of the high street banks typically ask that your business is turning over at least £50,000 per year. However, there are smaller companies that will offer the same service to businesses or individuals with a smaller turnover. You can enter your business characteristics in our website and we will find companies to suit you.
In addition to your turnover, you will also be asked about the methods you use to invoice your customers. Most institutions will insist that you invoice your customers on credit terms. Without this, there is generally too high a risk for a bank or a factoring company to take on your unpaid invoices.
You will also most likely need to be a business-to-business company to benefit from the services of high street banks. However, some specialist companies will also consider factoring for companies that sell directly to consumers. Generally, consumers are seen as a higher risk than businesses when it comes to recovering invoices and arranging invoice discounting.
Check your customers
Of course, in addition to finding the right invoice discounting firms for your business, it is also essential that you – as a business – check the credit score of your potential customers. This will significantly reduce the amount of bad debt that you are left with, and will prevent you from having to use up valuable funds and resources on unpaid invoices.
Find out how invoice factoring UK could help your business, or how to find the right invoice discounting firms today – with Cost Compare Limited.