What is invoice factoring?
Invoice factoring is an invoice finance product which allows businesses to unlock value tied up in unpaid invoices, immediately releasing most of the invoice value as cash rather than having to wait weeks or even months to get paid.
With Novuna you can release up to 90% of the value of your invoices within as little as 24 hours.
Invoice factoring companies in the UK also offer an invoice funding solution, whereby they collect payments on your behalf managed by a team of expert credit controllers.
There is a service fee with any invoice factoring company but this is only deducted once the full payment has been collected from the customer.
Try our invoice factoring calculator below to find out what the costs will be based on a combination of your company's turnover, the amount you'd like to release from each invoice and the average time it takes for your customers to pay you.
We are an award winning invoice factoring company
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 review
Is invoice factoring right for my business?
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
What are the main benefits of using invoice factoring companies?
Invoice factoring facilities allow medium-sized businesses to borrow money against the value of their unpaid invoices. The finance provider handles the credit control, meaning you don’t have to worry about investing in time and resources into chasing invoices.
How it works:
Supply the goods
Supply your customers with goods or services and invoice your customers as normal.
We handle the credit control
Your finance provider will release between 70% to 90% of the raised invoice value.
Your customers will pay the finance 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.
Choosing the right factoring product for your business
The needs of SMEs tend to vary according to growth stage and industry. To help you work out which type of factoring financing will suit your business, here is a brief guide to our five options:
Spot factoring is a way for a business to access funds by selling unpaid invoices to a 3rd party, a spot factoring company, on a one off basis in order to receive payment quicker.
Reverse-factoring is a financing option where a 3rd party financial provider finances the supplier on behalf of the buyer. The process involves the supplier, the buyer and the finance provider .The supplier sells the buyer’s unpaid invoice to the finance provider and receives the cash quickly, the buyer also gets longer to pay for its goods.
Account Receivable Factoring
Account receivable factoring provides businesses with an option to finance their venture without taking out a loan. This is a type of debtor finance where SMEs sell its invoices to a third party at a discount, in order to provide an immediate cash injection. There are many reasons why a business may factor an invoice, including increasing cash flow and mitigating credit risk.
Recourse and Non-Recourse Factoring
Resource factoring is a form of finance where a company sells its invoices to a factoring company. The factor pays the company a percentage of their cash value and then chases up payment of the invoices on behalf of the company. Non-Recourse factoring is a form of finance where a company sells its invoices to a factor and receives a percentage of the cash value from them.
Debt factoring is a finance facility provided by a debt factoring lender to help businesses leverage their acccounts receivable enabling them to instantly inject cash into the business. The debt factoring company pays the business a percentage of the total amount charged to the client and usually takes full responsibility for collecting the payment from the buyer.
What are the advantages and disadvantages of invoice factoring?
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
- You may find that some of your clients prefer working with you directly and dislike the fact that they have to interact with your finance provider.
It is also important to remember that most invoice factoring agreements are recourse arrangements, which means that you will be responsible for any unrecoverable invoices.
Invoice factoring in the UK has been revolutionised with our digital onboarding process
Invoice Factoring FAQs
What our customers say
Competent staff, slick technology. Would recommend
Halo is one of the smartest bits of tech I have seen & every team is only as good a it's people and I would like to take this time to actually specifically point out Alex Hall & Claire Davies. Alex is an account manager that has continually improved during our time working together and is a real credit to Novuna. Claire has been exceptional from start to finish; meticulous in her work and very patient with us at every temp - an absolute star. It is a shame that the email address went to a generic platform and not each individual. I totally understand why this works better for companies but it did mean that the personal element was lost meaning that starts like Claire will be harder to identify from a customer point of view.
High recommedation for Novuna Business Cashflow.
My company was in need of invoice factoring to assist with the cashflow due to the nature of debtor days with our clients. After looking at a number of options, the right decision was made to work in partnership with Novuna Business Cashflow. Right from setup through sales to customer service, 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. This has allowed my company to look at positive growth knowing we are safe financial hands. I would highly recommend Novuna Business Cashflow 10/10.
Set up went well and communication was good.
Syed and Vipul were extremely helpful top class service
Very helpful from the start
Great people made this process very straightforward.
Jemma from Novuna (formally Hitachi) was brilliant. Worked with us throughout the process and succeeded when some others had failed. Carried out the necessary checks with a smile and cheery demeanour, making what would have been a laborious process quite manageable.
Teething problems -Maybe ?
It's still early days so I may alter this review at a later date. However with retentions and concentration limits and other items, were finding were not getting 85% up front, were probably getting nearer 70% Also when a customer pays the remaining allegedly 15% due to us seems not to be credited to become available. For instance a customer paid Â£6918 and a customer paid Â£1300 hence we should see an extra Â£1330 available (15% of both these payments). However availability seemed to go down and not up by Â£1330 !!! Hard to work out where this 15% has actually gone ? I'll re-submit this review when things become clearer.
I found Hitachi true to their world in every aspect of the service they promised. I can't recommend enough.
Excellent Customer care and service.
Excellent customer service from start of initial conversations, right through to finally becoming a customer. The whole team involved are a credit to Hitachi, they were accommodating and informative the whole way along the process. I would highly recommend Hitachi to future clients and business associates. Thanks Alan.
I really enjoyed working with the Hitachi team, professional, helpful and really good people to deal with. They have made what could have been a very difficult experience a pleasure. Very happy to recommend them.
Hitachi made the process of moving factoring facilities painless, bearing in mind we previously had our facility with the same provider since 1997. I cant fault Hitachi's staff and processes and we are delighted with the move.
Staff excellent all together professional
Great service so far
From start to finish the process for transferring our invoice finance to Hitachi has been been brilliant, a smooth transition, great communication our link Person Jonathan Oakes has helped the process go through seamlessly, A great experience so far and a brilliant start to what we hope will be a long term partnership.
Alternative invoice financing products from Novuna Business Cash Flow
Want to learn more about how you can boost your businesses cash flow?
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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.