Products Compare Use cases Company Resources Quick signup Sign in What Is Invoice Factoring? Invoice factoring is an invoice finance facility that businesses use when they sell their outstanding invoices to a factoring company at a discounted rate. They get an advance on the money they’re owed whilst the lender takes over the credit collection process. Invoice factoring, which is also referred to as debt factoring, is a specific type of invoice financing. This form of financing provides companies with instant cash injections in exchange for a service fee. You receive up to 100% of your invoice value almost instantly, whilst the factoring company takes over the hassle of chasing your payments. Once your debtor pays the outstanding amount, the lender releases all remaining payments. It avoids late payments and cash flow gaps – two influential factors to the survival of any business. How does it work? Invoice factoring works by selling your outstanding invoices to a factoring company, typically in exchange for a predetermined financing fee. This fee is calculated as a percentage of your company’s gross turnover. One fee will usually cover all collection, administration, and management costs associated with the financing. After processing your invoice and deducting the service charge, up to 100% of your invoice value is advanced and the lender proceeds to take over the payment collection process. For example, if you’ve agreed on a 1% factoring fee and you issue your client an invoice for £10,000, the lender can advance you £9,900 as soon as your invoice is cleared. This way you can benefit from the highest amount of capital in the shortest amount of time. You can then use this cash to pay contractors, pay your employees, or complete projects. Simple, fast finance for a new working world Get in touch Sales 020 4538 9571 hello@sonovate.com Support 020 7112 4959 customerservices@sonovate.com Products Funding & back office Funding Timesheets Use Cases Recruitment Consultancies Labour marketplaces Contractors APIs Company About Careers Media coverage Partner with us Brand Assets Get in touch Request Callback Get a quote Resources Blog Ebooks Comparison Success stories What is Invoice Finance? What is Invoice Factoring? What is Invoice Discounting? What is Fintech? What is Embedded Finance? How to Start a Recruitment Agency International & Export Finance Find Us Sonovate Limited 6th Floor, 80 Cannon Street, London, EC4N 6HL 4th Floor, Golate House, 101 St. Mary Street, Cardiff, CF10 1DX Site by © 2021 Sonovate - Sonovate Limited is a company registered in England and Wales with company number 07500445 Terms & Conditions Privacy Cookies Sitemap