What is a factoring company and how does the invoice factoring process work?
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Pages in this SectionWhat is a factoring company?
A factoring company buys a business' unpaid invoices in return for a factoring fee which is deducted once the full payment has been collected from the customer. A factoring company enables businesses to release cash by purchasing their invoices at a discount.
Most factoring companies are recourse arrangements, which means that you will be responsible for any unrecoverable invoices.
What is invoice factoring?
Invoice factoring is when a business sells its invoice to a third-party company. It's a form of invoice finance and will give your business an effective way to improve its cashflow position.
The invoice factoring provider provides the credit control service to recover payment of the unpaid invoice. Invoice factoring companies allow you to release cash from your unpaid invoices quicker than having to wait between 30 to 90 days – and sometimes up to 120 days – for your customers to pay you.
As your acting invoice factoring provider we handle your credit control, allowing you to concentrate on other areas of the business instead of chasing up late payments.
How does the factoring process work?
- Supply the goods: Supply your customers with goods or services and invoice your customers as normal.
- Your factoring company will handle the credit control: Your factoring company will release up to to 90% of the raised invoice value. Your customers will pay the factoring company directly and chase payment of the invoices on your behalf.
- You receive the money: Once the customer settles the invoice, the finance company will release the remaining invoice amount to you minus the relevant fees.
What are the advantages of working with Novuna Business Cash Flow as your invoice factoring company?
We are an award winning factoring company
Our invoice factoring service comes highly recommended by our customers


"The communication and support has been outstanding. Providing me with all the information I needed regarding new clients coming onto our books. The system they use is so user friendly and the drawdown payments are very efficient in the fast moving world of temporary payroll."
Read full reviewUK invoice factoring has been revolutionised with our digital onboarding process

Advantages of invoice factoring:
- Benefit from improved cash flow
- Enjoy better working capital, which means more money for growth projects, staff training or stock purchases
- Be able to move away from more restrictive forms of finance, like small business loans or overdrafts
- Benefit from your chosen finance provider’s in-house credit control processes
- Be able to focus on running your business, instead of chasing clients for payment
Disadvantages of invoice factoring:
There are some disadvantages of invoice factoring too - your clients will be informed that you’re using an invoice factoring service, and your factor will contact them to collect on factored invoices which means that:
- The image of your company may be affected, particularly if your clients assume that you are not established enough to oversee your own credit control
- You won’t be able to maintain your standard approach to client communication
Is invoice factoring right for your business and industry?
Generally speaking, invoice factoring facilities are best suited to companies that sell to other businesses on credit terms, and turnover more than £50,000 a year.
Invoice factoring can be used by any industry that sells products or services to another company but in particular industries that suffer cash flow problems due to the nature of their business.
Industries that experience high production costs, seasonal sales slow downs, slow paying clients, experience unexpected growth and other unpredictable costs affecting their day to day operational cash flow use factoring as a non debt solution to their cash flow problems.
These industries will include (but are not limited to) manufacturing, construction and service industries, trucking companies and staffing agencies.
Why choose Novuna Business Cash Flow
6 month trial period
A 6 month trial period so you can be sure the product is right for you, followed by a 6 month rolling contract – we don’t tie our clients in for long periods.
Digital onboarding
We are the first in the market to offer a digital onboarding process and have been leading the way with our digital capabilities allowing clients to sign up within 24 hours from the first appointment.
Client Trust Account
Once you become a client you will be given your own trust account, meaning you will get same day availability on your funds. You can also view all of your invoices and payments online at a time suitable to you, 24/7.
No uncleared effects
We have heavily invested in our digital capabilities. This includes the auto allocation of payments using Artificial Intelligence. Ultimately this advance in technology means that our clients access money quicker as well as saving money on interest charges due to auto allocation.
Simple pricing
We aim to make the process of Cash Flow finance as simple and straightforward as possible. Our pricing is very straightforward to understand. For a no obligation quote or an informal chat you can call our friendly team today on 0808 250 0859.
Award winning support
We offer award-winning client services and individual Relationship Managers who are on the other end of the phone or out in the field to visit you in person.
Get in touch
Contact one of our invoice factoring experts on our freephone
0808 258 2297
8:45 - 17:15 - Monday to Thursday &
8:45 - 16:45 - Friday
Invoice Factoring FAQs


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We explore ways you can begin improving your cash flow situation and start getting your business on track to positive cash flow.
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