Days your customers actually take, often 45 to 60.
Share of each invoice paid to you upfront.
Estimated total annual cost
Service / admin fee
Discount charge (interest)
Typical funding released
What affects the cost
- Facility type. Factoring includes credit control so costs more. Confidential discounting is cheaper but you chase payments.
- Turnover. Larger ledgers win lower rates. Above roughly 1 million pounds you can often push the service fee below 1 percent.
- How fast customers pay. The discount charge is interest on drawn funds, so longer payment terms cost more.
- Advance rate. A higher advance releases more cash upfront but means a slightly larger balance accruing interest.
- Sector and debtor quality. Construction and long-term or concentrated debtors attract higher rates than blue-chip clients.
- Extras. Bad debt protection, minimum monthly fees, audit and transfer charges and notice periods all add to the real cost.
How the charges work
- Service fee. A percentage of your turnover, typically 0.2 to 0.75 percent for discounting and 0.75 to 2.5 percent for factoring.
- Discount charge. Interest on the cash advanced, usually 1.5 to 4 percent over the Bank of England base rate, charged daily.
- Advance. Most providers release 70 to 90 percent of each invoice straight away, with the balance paid once your customer settles.
- Recourse. With recourse you carry the bad-debt risk. Non-recourse shifts it to the provider for an extra premium.
- Flexibility. Selective or spot finance lets you fund single invoices with no whole-ledger commitment, at a flat fee per invoice.
- Watch the small print. Minimum fees, setup charges and long notice periods can outweigh a tempting headline rate.