6 best UK invoice factoring companies for small businesses
Factoring invoices can make a big difference in your cash flow, but how do you choose the right one?
Compare the top UK invoice factoring companies in this full guide to find out which one is the best.
Factoring invoices can help your business save money, but it can be challenging to find the right provider who will meet your needs and help you reach your goals.
We’ve done extensive research into the UK invoice factoring market and have identified three top choices for different stages of business.
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Best UK invoice factoring services for small businesses
These are the top UK invoice factoring firms for small businesses:
- Optimum finance – Best for start-ups
- GapCap – Best for speedy application
- Inspiration Finance – Best for medium companies
- Bibby Finance Services – Best for global competence
- Novuna – Best for determining if invoice financing is right for you
- Skipton Business Finance – Great all rounder
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#1. Optimum Finance – Best invoice factoring company in the UK
Although it was founded in 2017, Optimum Finance has a significant presence in invoice financing. In 2018, the company issued £60 million in business funding. Optimum’s team has decades of experience in business finance. The lender specifically describes itself as an SME specialist and offers bespoke solutions for a variety of UK businesses. Optimum finance has no minimum turnover requirement. This makes it an excellent option for startups that need additional funding.
It provides quick access to 85% or more of the invoice amount and for an additional fee, businesses can receive debtor protection.
This is compensation for Optimum customers in the event of financial difficulty and inability to pay their liabilities.
Customers who invoice factor get access to E3, a live online system that allows you to monitor your Optimum Finance account as well as your sales ledger 24 hours a day.
Optimum Finance doesn’t have a website with customer reviews like other lenders. However, it has a rating of 4.6 (albeit from 12 reviews).
#2. Gapcap – 2nd Best invoice factoring company in the UK
GapCap is a great option if you are looking to finance invoices occasionally rather than making a commitment.
GapCap, which it calls selective invoice financing, allows companies to raise funds on future invoices on an ad-hoc basis without any contracts. This is a refreshing departure from some providers’ binding contracts.
The lender offers an advance of up to 85 per cent of the invoice value and prides itself on a fast application process. Most clients receive an offer within 24 hours.
Each client is assigned a dedicated account manager by the company. This may have contributed to the company’s high customer service score of 4.8 according to Trustpilot and based on 78 reviews; this rating is very high.
It is important to remember that selective invoice financing is only available to companies with at least six months of trading history. This means it is not available to early-stage startups.
#3. Inspired Finance – 3rd Best invoice finance company
Inspired Finance isn’t a lender, unlike the other companies listed. Inspired Finance is a broker who specialises in invoice financing and other types of business funding.
It was established in 2016 and offers low rates starting at 0.1% through its lenders.
It quickly became a success and was shortlisted for the Invoice Finance Broker Award at the 2019 Business Moneyfacts Awards.
Inspired Finance is proud to offer a bespoke service. The company will assess your specific needs and present you with the best funding options for your requirements.
This is a great option for companies that require expert guidance on funding.
#4. Bibby Finance Services – 4th Best invoice finance company
Bibby Financial Services is a significant player in the world of invoice finance. It has a strong track record and industry expertise in a wide range of areas.
The company can provide bespoke financing solutions and advance up to 100% of your invoice value within 24hrs.
The discount fee, which is the interest you pay on advanced invoices, is usually 1-3.5%. At the same time, the service fee (the amount charged for invoice factoring services) is between 0.5% to 3.2% of your company’s annual turnover.
Bibby stands out because of its size – it funds over 7,000 businesses. It also has extensive experience in construction, manufacturing, and wholesale sectors.
It has an unrivalled track record. It was established in 1982 and has been financing its longest-standing client since 1989.
Bibby is a family-owned business that has been operating for over three decades. This gives it an excellent reputation for customer service.
It has an average rating 4.7 from Trustpilot and is highly regarded for its professionalism and hands-on approach, and some reviewers described how they have used it for more than a decade.
Bibby provides services for an unlimited duration under a rolling contract. Customers have access to a 24/7 online service and Bad Debt Protection. This means that clients of Bibby won’t lose their money if one of the payees has financial difficulty.
To be eligible, businesses must have a turnover exceeding £100,000. Smaller SMEs may have to look elsewhere to get funding.
#5. Novuna, formerly Hitachi Capital, 5th Best invoice finance company
One thing stands out when you look at invoice factoring by Novuna.
It was awarded the Best Invoice Discounting and Factoring Provider at the 2019 Business Moneyfacts Awards, the UK’s biggest business finance awards ceremony.
The company supports more than 800 SMEs currently and has over 25 years of experience funding businesses. Novuna advances up 90% on the invoice value and offers two fee structures.
The standard invoice factoring product it offers has the following terms: a service fee of a percentage of company turnover and a discount fee of the amount lent.
Novuna offers an alternative product called Inspired Cashflow. This is a complete invoice factoring solution. It charges a simple fee between 0.45% to 5% of the company’s annual turnover.
This is an excellent option for SMEs that are worried about the complex fees of other providers.
Novuna is one of the few companies offering a six-month trial period to determine if invoice factoring is right for you.
You’ll then be offered a rolling monthly agreement, which is ideal for small businesses that aren’t interested in long contracts.
The provider scores well for customer service with an average Feefo score 4.3. Seven reviews have been left about the company in the last year. One of them criticises communication issues between departments.
Novuna says its services are available to businesses with an annual turnover below £50,000. They stress, however, that each business is evaluated individually and that startups are welcome, particularly if homeowners.
#6. Skipton Building Society is the 6th Best invoice finance company
Skipton Business Finance was established in 2001. It is now part of the Skipton Building Society. This financial institution has been around since 1853.
Skipton claims this gives the company a new perspective. The company states that it is “focused on understanding the businesses of its clients and assisting in creating wealth in the regions, instead of purely for profit.”
They can advance up to 90% on the invoice value and assign each client a dedicated relationship manager.
There are many options for invoice financing. MyWhite Label is one option. This package combines professional credit control with invoice finance.
Skipton Select is another option, offering what Skipton calls interest-free invoice factoring.
You pay a flat fee equal to a percentage of your annual turnover. Skipton is very open about this, publishing an online table.
Skipton is open to startups and it does not have a minimum turnover and offers invoice finance for start-ups.
How can I find the best invoice factoring firm for my small business?
How to choose an invoice factoring firm?
- Transparent fees – It is essential to understand what you are paying for and what additional fees may apply to your invoice factoring service.
- Transparent terms and conditions – As with any financial product, carefully review the terms and conditions. You don’t want a clause that isn’t expected.
- Credit control – While many providers provide this service as a standard, it is worth looking into – getting professional assistance in assessing your customers’ creditworthiness can make a huge difference for your small business.
- Bad debt protection – Although this is usually an additional fee, it is worth looking into. You will be protected if your clients have financial difficulties or can’t pay their debts.
- A dedicated relationship manager – This is vital: you want to be able to talk to someone who understands your company and not just a switchboard operator.
- Industry expertise – Find a factoring firm that has experience in funding businesses similar to yours and is familiar with the industry you are operating in.
- Excellent customer service – Check out customer reviews on Trustpilot or Google reviews to get an idea of the quality of customer service you can expect.
There are many things to take into consideration when selecting the right invoice factoring agency for your small business.
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Factoring companies for invoices: the best option for your business
The best invoice factoring solution can make all the difference in your small business.
Consider the pros and cons when evaluating providers. This includes the quality of customer service, the availability of a dedicated account manager, the level of industry expertise, and whether or not they are familiar with the difficulties associated with small-business finance.
You may need invoice factoring to finance your construction or recruiting business. Check out our detailed guides to construction finance if you are looking for these types of finance requirements.
It is also important to obtain a variety of quotes from different providers. We can find you the best invoice finance company quickly, start below now:
FAQs
Will my customer know that I use a factoring company to help me?
It all depends on which invoice factoring company you choose and on your agreement with them. Many invoice factoring companies offer a confidential product that protects their identity.
This may mean that they charge more than the standard offer. A company that invoices customers openly may encourage them to pay faster.
Do startup businesses have access to the best invoice factoring?
It all depends on the provider’s requirements. Some providers require a minimum annual turnover, while others evaluate each business individually.
For invoice factoring funding, a startup business without a trading history will need to pay high fees. You may also need to place an asset (such as your home) in order to get financing.
Is it possible for invoice factoring companies to offer invoice discounting as well?
Invoice discounting is offered by most invoice factoring firms. With invoice discounting, the company receiving funding has control over things such as payment chase and invoice processing.
It’s easier to conceal the involvement of your invoice financing partner. However, invoice discounting is better suited for larger businesses because of the additional work involved.
Is invoice finance secured or unsecured?
There are two types of business loans available: unsecured business loans and secured business loans.
Invoice finance can come under both of these types of loans depending if the lender you choose requires security on the available loan amount they are prepared to lend you.
If you have bad credit then the loan amount will most likely be secured on some asset. If this is not an option then you may be best looking into bad credit business loans which can have more flexibility for you.
How do you get approved for the best invoice finance for you?
We can get you approved for invoice finance, start online below now: