Exploring invoice factoring solutions could greatly enhance your small business’s cash flow – yet the dilemma remains: which is the best one to choose? Keep reading to compare the top companies in the UK.
Invoice factoring offers the opportunity to release crucial funds for your business – yet sourcing a provider that aligns with your requirements and propels you towards your objectives can pose a challenge.
Luckily, our team has delved into the UK invoice factoring landscape and pinpointed our top six recommendations tailored to various business stages.
Through thorough research, our experts have determined that eCapital, Skipton Business Finance, Lloyds Commercial Finance and the intermediary service Inspired Finance stand out as the finest invoice factoring services available.
In this guide, we’ll elaborate on the strengths of each, alongside exploring additional alternative options.
Best invoice factoring services at a glance
- eCapital – best for a speedy application process
- Apollo Business Finance – best for start-up businesses
- Lloyds Commercial Finance – best for larger businesses
- Bibby Financial Services – best for global expertise
- Hitachi Capital UK – best for testing to see if invoice finance is right for you
- Skipton Business Finance – best for a clear fee structure
Understanding the costs associated with invoice factoring is crucial – click on any of the links above to start comparing fees for invoice factoring services tailored to the size and requirements of your own business.
Given business overheads pose a significant challenge amid the cost of living crisis and economic downturn, invoice factoring emerges as a crucial resource for businesses seeking immediate cash flow solutions. However, before making any commitments, it’s imperative to grasp the associated fees and conditions.
Take advantage of our complimentary, no-obligation cost comparison tool to gain insights into the probable invoice factoring fees tailored to your business. Simply provide a few details about your business needs, and we’ll seamlessly connect you with reputable invoice factoring agencies that match your criteria.
Within this guide, we’ll comprehensively outline each of the identified invoice factoring services ideal for small businesses. Continue reading for in-depth insights into six of the finest invoice factoring companies operating within the UK.
What is an invoice factoring company?
An invoice factoring company is a financial institution specialising in assisting businesses with managing their cash flow. Its primary function revolves around purchasing outstanding invoices from businesses at a discounted rate, thereby providing immediate access to cash.
This service is particularly valuable when customers delay payments or when there’s an extended payment period before receiving the full amount. By offering this liquidity, invoice factoring companies enable businesses to meet their financial obligations promptly, such as paying suppliers or investing in growth initiatives.
Invoice factoring companies assume the responsibility of collecting payments from the customers, thereby relieving businesses of this administrative burden. Additionally, they help mitigate the risk of bad debts by assuming the credit risk associated with the invoices purchased. Overall, invoice factoring companies play a pivotal role in enhancing the cash flow and financial stability of businesses across various industries.
Best UK small business invoice factoring companies
According to our research and analysis, the leading three invoice factoring companies tailored for small businesses in the UK are:
- Apollo Finance – Ideal for startup enterprises, Apollo stands out as an excellent option with no minimum turnover prerequisites, catering specifically to SMEs as a specialist in the field.
- Peak Cashflow – With its adaptable lending approach and absence of binding contracts, Peak Cashflow emerges as a flexible choice for invoice factoring, backed by glowing reviews.
- Satago Financial Solutions – An exceptional service, Satago excels in connecting businesses with comparable costs for invoice factoring, making it an excellent choice to consider.
For bespoke guidance in finding your perfect factoring match, share insights about your business to receive tailored quotes from leading UK finance firms.
1. eCapital Commercial Finance
eCapital Commercial Finance is a renowned financial institution, specialising in providing innovative funding solutions tailored to meet the diverse needs of businesses across the UK.
With a commitment to empowering businesses of all sizes, eCapital Commercial Finance offers a comprehensive range of services, including invoice factoring, invoice discounting, and asset-based lending.
Backed by a team of seasoned professionals with extensive experience in the financial industry, eCapital Commercial Finance prides itself on delivering personalised financial solutions designed to optimise cash flow, support growth initiatives, and enhance overall financial stability.
With a strong emphasis on transparency, efficiency, and customer satisfaction, eCapital Commercial Finance continues to be a trusted partner for businesses seeking reliable and flexible financing options to fuel their success.
A standout feature of eCapital is its absence of a minimum turnover requirement, distinguishing it as an excellent option for startups seeking additional funding.
It facilitates swift access to up to 85% of the invoice amount, with the added option of debtor protection for businesses willing to pay an extra fee. This invaluable service ensures peace of mind for eCapital clients, offering compensation in scenarios where customers face financial challenges and are unable to fulfil their payment obligations.
Verdict: eCapital Commercial Finance is a great fit for startups and other small businesses.
2. Apollo Business Finance
Established in 2016, Apollo Business Finance embarked on a singular mission: to offer cash flow support to businesses of varying sizes and shapes, irrespective of credit history or past challenges.
Recognising the frustration experienced by many business owners who were deemed “too small” or “too risky” by traditional lenders, Apollo arose from this understanding.
As a small business themselves, they empathised with the struggles faced by fellow entrepreneurs. Thus, Apollo was conceived to address these cash flow obstacles and offer all businesses an equal opportunity to thrive, unencumbered by industry, business size, credit history, or adverse personal records.
Over the years, they have proudly assisted thousands of businesses spanning more than 25 different industries, facilitating over £10 million in total funding across the UK. Your decision to engage with us marks an essential chapter in our journey, and we express our heartfelt gratitude for your trust and partnership, which have been instrumental in our growth and success.
Verdict: Apollo Business Finance is a great fit for startup companies looking for money for growth.
3. Lloyds Commercial Finance
Lloyds Commercial Finance is a leading provider of financial solutions tailored to the diverse needs of businesses across the UK. With a rich heritage spanning decades, Lloyds Commercial Finance offers a comprehensive suite of services, including invoice finance, asset-based lending, and supply chain finance.
Backed by the strength and stability of Lloyds Banking Group, one of the UK’s largest financial institutions, Lloyds Commercial Finance provides businesses with access to flexible funding options designed to support growth, improve cash flow, and enhance financial resilience.
With a customer-centric approach and a commitment to innovation, Lloyds Commercial Finance remains a trusted partner for businesses seeking reliable and bespoke financing solutions to navigate the challenges and opportunities of today’s dynamic business landscape.
Verdict: A prefect fit for medium and large businesses or companies that carry out export.
4. Bibby Financial Services
Bibby Financial Services is a powerhouse in the realm of invoice finance, renowned for its stellar track record and profound industry expertise across various sectors.
Offering tailor-made funding solutions, Bibby stands out by advancing up to 100% of the invoice value within a swift 24-hour timeframe. Typically, their discount fee ranges from 1% to 3.5% of the invoice amount, while the service fee varies between 0.5% and 3.2% of the company’s annual turnover.
With a vast clientele exceeding 7,000 businesses, Bibby’s extensive experience extends across sectors such as construction finance, recruitment, manufacturing, and wholesale. Founded in 1982, Bibby boasts an unparalleled legacy, having served its longest-standing client since 1989.
This enduring success is further underscored by Bibby’s sterling reputation for exceptional customer service, reflected in its impressive Trustpilot rating of 4.7. Bibby’s commitment to professionalism and hands-on assistance has earned it loyal patrons, some of whom have relied on its services for over a decade.
Operating on a rolling contract basis with no set duration, Bibby also offers round-the-clock online account access and Bad Debt Protection for added peace of mind, albeit at an extra cost.
With eligibility criteria requiring businesses to have an annual turnover exceeding £100,000, smaller SMEs may need to explore alternative funding options.
Verdict: Bibby’s extensive scale, impressive track record, and profound industry expertise render it an excellent option particularly suited for larger SMEs.
5. Hitachi Capital UK
When examining Hitachi Capital UK’s invoice factoring services, one aspect immediately catches the eye: their accolade as the Best Factoring and Invoice Discounting provider at the esteemed 2019 Business Moneyfacts awards, a notable recognition in the UK’s business finance landscape.
With over 25 years of experience in funding businesses, Hitachi Capital UK currently supports over 800 SMEs. They offer the flexibility of advancing up to 90% of the invoice value and present two distinct fee structures.
While their standard invoice factoring product operates on conventional terms, with service and discount fees based on turnover and amount lent respectively, Hitachi also provides Inspired Cashflow, a straightforward solution with a fee ranging from 0.45% to 5% of the company’s annual turnover.
This transparent approach appeals to SMEs seeking clarity amidst complex fee structures. Impressively, Hitachi offers a unique six-month trial period for businesses to assess the suitability of invoice factoring, followed by a rolling monthly contract, catering perfectly to SMEs averse to lengthy commitments.
Renowned for their commendable customer service, Hitachi boasts an average Feefo score of 4.3, though feedback indicates occasional internal communication challenges.
Notably, Hitachi Capital UK welcomes businesses with a minimum annual turnover of £50,000, with individual assessments conducted for startups, particularly if the proprietors are homeowners.
Verdict: Hitachi Capital offers a straightforward solution with its one-fee Inspired Cashflow product, making it an attractive option for SMEs. The six-month trial period provides a low-risk opportunity for businesses to try out invoice factoring.
6. Skipton Business Finance
Established in 2001, Skipton Business Finance operates under the umbrella of Skipton Building Society, a financial institution with a storied history dating back to 1853.
The company prides itself on its unique perspective, emphasising a focus on understanding clients’ businesses and contributing to regional wealth and job creation, rather than solely pursuing profits. Skipton Business Finance offers to advance up to 90% of the invoice value to its clients and assigns each one a dedicated relationship manager.
The range of invoice finance options available includes My White Label, a discreet package combining invoice finance with professional credit control, ensuring confidentiality for clients.
Additionally, Skipton Select provides what it terms as interest-free invoice factoring, where clients pay a flat fee based on a percentage of their annual turnover, with transparent fees disclosed on the company’s website.
Skipton also welcomes startup ventures, with no minimum turnover requirement listed and a dedicated section on its website catering to Invoice Finance for New Start Businesses.
Verdict: Skipton Select presents a favourable choice for SMEs, offering a transparent fee structure, diverse product range, and a robust emphasis on fostering strong client relationships.
How does an invoice factoring company work?
When a business operates on credit terms, issuing invoices for its products or services, delays in receiving payments can significantly impact cash flow and impede financial flexibility for immediate needs or expansion efforts.
To tackle this challenge, businesses can engage the services of an invoice factoring company. These firms assess the creditworthiness of the business’s clientele and offer to purchase outstanding invoices based on their evaluation.
Upon acquisition, the factor takes over the responsibility of collecting payments from customers, handling reminders and follow-ups. Once payments are received, the factor deducts their fees and advances provided, then forwards the remaining balance to the business.
This process of immediate cash access, coupled with efficient collections and risk management, aids businesses in bolstering cash flow and sustaining financial stability.
What types of businesses are invoice factories companies suitable for?
Invoice factoring companies cater to businesses across various sizes and industries facing cash flow hurdles stemming from sluggish customer payments. Whether it’s startups, service-oriented enterprises, or firms navigating seasonal or growth-induced cash flow strains, invoice factoring emerges as a pragmatic solution to enhance liquidity and sustain operations.
For small businesses and startups, invoice factoring proves invaluable in fortifying cash flow and securing working capital essential for day-to-day activities and expansion endeavours. Shockingly, a concerning 22% of small business owners opted for inaction amidst clients’ delayed payments this year—a risky strategy with potential long-term ramifications, including cash flow disruptions and supply chain complications.
Service-based enterprises, encompassing consulting firms or marketing agencies, leverage invoice factoring to bridge the gap between invoicing clients and actual receipt of payments.
Furthermore, businesses operating within seasonal industries stand to gain significantly from invoice factoring, effectively managing cash flow fluctuations inherent in their operations throughout the year.
Top UK invoice factoring companies: side-by-side comparison
What to look out for when choosing an invoice factoring company?
Navigating the landscape of invoice factoring companies for your small business requires careful consideration of various factors.
To simplify this process and gain expert assistance, utilise our complimentary cost comparison tool. By doing so, you’ll receive customised quotes from leading invoice factoring companies in the UK, perfectly tailored to address the unique requirements of your business.
For help in finding your perfect invoice factoring match, share insights about your business to receive tailored quotes from leading invoice finance firms in the UK.
Invoice factoring companies: making the best choice for your business
Undoubtedly, selecting the right invoice factoring solution holds significant importance for your small business’s financial health.
A recent Nerdwallet report revealed concerning statistics: while approximately 35% of invoices were less than a month overdue and 27% were between one and three months late, a staggering 20% of business owners reported outstanding invoices dating back four to six months.
However, the decision shouldn’t solely hinge on finding the lowest fees. It’s crucial to weigh the pros and cons of each provider meticulously. Factors to consider include the quality of their customer service, the availability of a dedicated account manager, their industry expertise, and their familiarity with the challenges inherent in small business finance.
For specific sectors like construction or recruitment, delve into our comprehensive guides on construction finance and top recruitment factoring companies to make informed decisions.
Furthermore, obtaining quotes from various providers is essential. To kickstart this process, fill out our 🔍cost comparison tool, and receive tailored invoice factoring offers perfectly suited to your small business’s unique needs.
Read more:
Frequently Asked Questions
Will my customer know I’m using a factoring company?
Yes, typically, customers are aware when a business uses a factoring company as invoices are assigned to the factoring company for payment collection.
Is invoice factoring available to startup businesses?
Yes, invoice factoring is available to startup businesses. Many factoring companies offer their services to startups, providing them with access to immediate cash flow by purchasing their invoices.
Can invoice factoring companies also offer invoice discounting?
Yes, invoice factoring companies can also offer invoice discounting services. While both options involve using unpaid invoices to access cash, invoice factoring involves selling invoices to the company outright, whereas invoice discounting allows the business to retain control of its sales ledger and collect payments itself.
Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.