Invoice Factoring for SMEs

Invoice Finance providers have high entry requirements to obtain this premium type of funding.

SMEs usually only have access to Invoice Factoring, which includes full credit-management which many have no need for. Strict criteria such as a minimum turnover of £2 million, profits over 3 years or minimum net worth of £50k are used to exclude the smaller business from eligibility, whereas in reality the nature of the invoices, which are provided as security, are as robust as any multi-million pound business.

Pragmatic approach

Here at Skipton Business Finance, we have a pragmatic approach. We are focused on what solution best suits the client’s needs and, provided we have the confidence that they can run what should be a low risk facility, we are happy regardless of the size of the business.

Invoice Factoring: The Process 

Invoice Factoring couldn't be any simpler. In fact, because you're effectively outsourcing your credit control to our world-class team, it makes running your business that much easier. Find out if Invoice Factoring would be perfect for your business.

Invoice Factoring (also known simply as Factoring) is a flexible Invoice Finance solution that advances working capital to a business as it issues new invoices. Cashflow is the lifeblood of any business and Invoice Factoring simply allows you access to your cash the moment you raise an invoice.

It’s the umbrella term for many forms of Invoice Factoring, such as Disclosed Invoice Factoring, Confidential Invoice Factoring, Recourse Invoice Factoring and CHOCS. It’s the most common form of Invoice Finance in the UK and the number one alternative to bank overdrafts and bank loans.

According to British Business Bank, Invoice Factoring is: A type of Invoice Finance that allows businesses to generate money against unpaid invoices. The finance provider will lend you up to 90% of the value of your invoices. It will also manage your sales ledger and collect payment for your invoices direct from your customers. It will then deduct the costs of the Factoring service, before paying you the remaining balance.

Invoice Factoring is different to Invoice Discounting because with Invoice Factoring our team would manage your sales ledger, credit control and collect payments from your customers on your behalf. This would save you time chasing payments and help you focus on the day-to-day running of your business. If, however, you would prefer to maintain control over these matters then our Invoice Discounting solution would be more suitable.

Invoice Factoring is not considered a loan as it is a purchase of accounts receivable. The factoring company purchases future receivables (invoices) and provides the business with a percentage value of the invoice upfront. The remaining balance minus a fee is then paid to the business once the invoices have been settled. Rather than a business waiting a significant length of time for an invoice to be paid, Invoice Factoring enables a business to access cash quickly and easily.

What are the benefits of Invoice Factoring?

If you're an SME, increased cashflow is, without a doubt, the biggest benefit of any Invoice Finance solution.

With access to funds up-front, you will have the freedom to make payments on regular bills such as tax, salaries or rent, as well as added confidence to deal with unexpected bills if they occur.

The flexible service we provide will also ensure that your Invoice Factoring solution grows with your business, therefore there will be no need to increase or re-negotiate as you would with your bank overdraft or other borrowings. As your business grows, so does the Invoice Factoring solution!

This is exactly what we mean when we say that Invoice Factoring can prove much more flexible than a traditional bank overdraft and can normally generate twice as much funding.

Partnership Approach

Through our partnership approach to business we are happy to advance the cash and let the client collect the invoices. This allows the client to preserve their close customer relationship whilst giving access to flexible funding which will then ultimately grow in line with the business.

Invoice Factoring provides benefits beyond a great cashflow

  • Immediate access to up to 90% of your invoices the day you complete the work
  • As your business grows, so does your facility
  • Professional Credit Control 
  • Dedicated Relationship Manager 
  • Overpayments available to help with the smooth running of your business
  • Fast decision-making 
  • Free credit reports on your customers to help you make informed decisions
  • Award-winning service levels