Once you’ve decided invoice factoring is the right financing option for your business and have found potential lenders, it time to choose the one for you. Choosing a lender for this type of finance can be a time-consuming process but its well worth carrying out thorough research to find the provider and invoice factoring facility for your business. When choosing a factor you should consider the following points:
- Reputation: is the factor credible? What are their clients saying about them? Read online reviews and find them on comparison websites to see how they fare against their competitors
- Recourse or non-recourse: more on this later. Weigh up the pros and cons of each; while it can massively reduce the pressure to opt for non-recourse factoring, you’ll have to pay for the privilege. Even with non-recourse, check the T&Cs as many factors refuse to assume liability under certain circumstances (further details on recourse below).
- How well do they know your industry? It’s preferable to opt for a factor which has experience in your industry. Some factoring companies specialise in specific industries, meaning they can offer tailored packages and more effective support.
- Terms: Read the terms and conditions offered by each provider, making sure you are clear on all charges and additional fees.
With these factors in mind, it’s time to start looking for an invoice finance provider. To aid you in your research, here’s a brief overview of some of the financiers on the market.
ABN AMRO Commercial Finance
ABN AMRO offer services to large companies as well as startups. If you are a fledgling business, however, you will need to provide a solid business plan and have forecasted revenue of over £1 million in the first year. This lender is, therefore, only suitable for companies with a high potential for growth.
You can apply over the phone, after which you will need to attend a meeting. The whole process takes approximately five days. One of the benefits of this provider is that they offer a 6-month trial period with no commitment, which mitigates the risk of getting locked into a standard 24-month contract. This trial demonstrates the confidence that ABN AMRO have in their products, which is likely down to their excellent customer service, rated one of the best in the industry.
Aldermore Invoice Finance
Aldermore have one of the slower application processes, taking up to several weeks to reach a decision, making them a less viable option for companies looking for quick cash. That said, they have an exceptionally high approval rate of 90%. If you’ve previously been rejected from other finance providers, Aldermore may be an option for you. They were also awarded the Invoice Finance Provider of the Year award by Credit Today in 2015.
Close Brothers Invoice Finance
Close Brothers offer access to up to 100% of the value of invoices with their Liquidity Plus scheme. Their products aim to support larger businesses with a minimum turnover of £500,000. Close Brothers determine bespoke fee structures based on your activity, so they’re unable to provide any prices for their services until you apply. Close Brothers offer a comprehensive platform, reconciling factored payments with existing invoices, making it one of the more accessible services to use.
Hitachi Capital UK
Hitachi offer services to clients with a minimum turnover of £50,000. Their application is short and concise, requiring only an online quote and telephone call. They’re upfront and transparent with their fees, making them a popular choice – they are one of the largest factoring companies in the world, with over 800,000 customers. This experience has contributed to, and no doubt has arisen from, their excellent customer service. In 2019, they won the Business Moneyfacts Award for Best Factoring & Invoice Discounting Provider.
Metro Bank
Metro Bank offer advance rates of up to 90% of the value of invoices. Customers must apply over the phone. Their terms are particularly friendly to SMEs, as there’s no requirement for a long-term commitment, with most contracts including a 28-day notice clause. They also don’t have any minimum fees or set-up fees.
Skipton Business Finance
Like Metro Bank, Skipton offer an advance rate of up to 90%. They don’t require clients to have a minimum turnover, making them a helpful provider for smaller businesses. They offer a high level of transparency when it comes to payment terms and fees, and can provide facilities covering your entire sales ledger, up to the value of £5 million.
