Invoice Factoring Broker
Release cash from your unpaid invoices and let a factor collect payment for you
/ FCA Registered
Reference: 729876
Turn unpaid invoices into cash now
Factoring gives you most of an invoice’s value soon after you raise it, instead of leaving you to wait weeks or months for your customer to pay. It also hands the collecting to the lender, so chasing payment stops being your job.
Mill Wood Finance enables UK businesses to find the right factoring facility, comparing factoring companies across a panel of lenders rather than pointing you at a single provider.
What is invoice factoring?
Invoice factoring is a form of invoice finance where you sell your unpaid invoices to a lender, known as a factor. In return you get most of the cash upfront and the factor takes over collecting payment from your customer.
The defining feature is that the factor runs your credit control. Your customers know the facility is in place, because they pay the factor directly. That makes factoring well suited to businesses that would rather not spend time chasing payment, and it is why it is often the starting point for smaller businesses without a credit control team of their own.
In practice, it works like this:
- You raise an invoice to your customer as usual
- The factor advances you most of its value, often within a day or two
- The factor collects payment from your customer on the due date
- Once the customer pays, you receive the balance minus the agreed fee
Invoice factoring vs invoice discounting
Factoring is one of the two main types of invoice finance, so a question we often hear is how invoice financing and factoring differ. Factoring is a form of invoice financing; the real choice is between factoring and invoice discounting.
Both release cash from unpaid invoices. The difference is who collects payment and whether your customers know.
Invoice factoring for small businesses
Factoring is often the most accessible form of finance for a small business, because a lender is largely looking at the creditworthiness of your customers rather than your own trading history. A newer business or a sole trader without years of accounts can still qualify, provided it invoices other businesses on credit terms.
It also removes a job small teams struggle to find time for. With the factor chasing payment, you are not spending evenings on credit control, and you have the certainty of knowing when cash will arrive. Providers vary in the minimum turnover and facility size they will take on, which is one of the things worth checking before you commit.
Factoring your whole ledger, or just part of it
You do not always have to factor every invoice. If you would rather not commit your whole sales ledger, spot factoring lets you fund a single invoice, and selective factoring lets you choose which customer accounts to factor while managing the rest yourself.
These suit businesses with occasional rather than constant cash flow needs, or those wanting to test factoring before committing to a full facility. Not every provider offers them, so matching you to one that does is part of what we do.
Comparing factoring companies
Factoring companies differ in the sectors they understand and the size of business they accept, as well as their fees. For a small business the first provider you come across is rarely the best fit, and comparing them properly takes time you probably do not have.
Mill Wood Finance compare factoring companies across a panel of lenders on your behalf. We match your business to the factors suited to your sector and size, and handle the process through to the facility being in place. Where you already factor, we can benchmark your current terms against the market to see whether they still stand up.
Seeing as we work across a panel rather than for one lender, the facility we recommend is the one that fits your business, not the one product a single provider happens to sell.
You may be a good fit for invoice factoring if...
- You sell to other businesses on credit terms and wait weeks or months to be paid
- You would rather the lender chased payment than tie up your own time on credit control
- You are a smaller or newer business without an established credit control function
- You want funding that grows with your sales rather than a fixed loan or overdraft
FAQs
What is invoice factoring finance?
Invoice factoring finance releases cash from your unpaid invoices by advancing most of their value soon after you raise them. The lender, or factor, then collects payment from your customer and pays you the balance minus its fee. It is a form of invoice finance in which the lender also runs your credit control.
What is the difference between invoice financing and factoring?
Factoring is one type of invoice financing. The broader term, invoice finance, also includes invoice discounting, where you keep control of collecting payment yourself. With factoring, the lender collects payment for you and your customers know the facility is in place.
Is invoice factoring good for small businesses?
Often, yes. Because eligibility rests largely on your customers’ creditworthiness rather than your own trading history, factoring can suit small and newer businesses that would find a conventional loan harder to secure. It also takes credit control off your hands, which helps smaller teams.
Is invoice finance suitable for small businesses?
Often, yes. Because a lender is largely assessing the creditworthiness of your customers rather than your own trading history, invoice finance can work for small and newer businesses that sell to other businesses on credit terms. It is worth checking a lender’s minimum facility size, which is something we help with.
Will my customers know I am using a factoring company?
Yes. With factoring the lender collects payment directly, so your customers are aware of the facility. If you would rather keep finance confidential, invoice discounting is the alternative, and we can talk you through it.
What is the difference between recourse and non-recourse factoring?
With recourse factoring, responsibility for an unpaid invoice returns to you if your customer does not pay. With non-recourse factoring, the factor carries that risk, usually for a higher fee. Which suits you depends on how much protection against bad debt you want, and we can weigh that with you.
Is Mill Wood Finance regulated?
Yes. Mill Wood Finance Limited is authorised and regulated by the Financial Conduct Authority for its credit broking activities. Our Firm Reference Number is 729876 and can be verified on the FCA register. We have been operating since 1999.
Speak to a specialist broker in invoice factoring
- Free Consultation
- Dedicated Account Manager
- Transparent Fees
Whether you are considering factoring for the first time or reviewing a facility you already have, we are happy to talk through your situation. You can book a meeting using the calendar below, visit our Brighton office, call us on 01273 523690 or email info@millwoodfinance.com.