What is Invoice Factoring?

Updated: 4 July 2022

Factoring (also known as invoice factoring) is a way of releasing the cash tied up in outstanding customer invoices before they are paid, enabling your business to stay in control of its cashflow without having to use an overdraft or take out a loan.

How does factoring work?

Factoring is one of many finance solutions offered by Bibby Financial Services (BFS), and if it’s considered the best fit for your business we’ll not only provide the funding and manage your credit control, we’ll chase and collect outstanding invoices on your behalf.

To get started, you simply invoice your customers as normal and send a copy to BFS. We then provide up to 90% of the invoice value within 24 hours, meaning you can get on with the day-to-day running of your business without worrying about cashflow.

Why use factoring?

In business, cashflow is king. Whether you are looking to drive growth or need support day to day, accessing the cash you’re owed now, rather than waiting for customer payment, can make a material difference to achieving your business goals.

You may be considering some other forms of business finance, such as an overdraft or credit card, or maybe taking out a loan. These options will all involve taking on additional debt. 

Factoring, on the other hand, enables you to use money that is already owed to your business. Releasing this vital working capital means you can run your business smoothly and efficiently with money you have already earned, rather than borrowing more.

Another advantage is that, with factoring, your funding grows in line with your business. As you take on more orders and process more invoices, your funding increases.
Are there any downsides to factoring?

When considering factoring, you may have concerns that your customers will be made aware that you are using an invoice finance service. If this is the case, we can offer a confidential service, which means we will never disclose your business is using an invoice finance facility.

How to set up a factoring arrangement

Bibby Financial Services offers a range of finance solutions to meet the needs of any business, regardless of size or stature, and factoring is just one such solution.

If you’re ready to talk to one of our team about setting up a factoring facility Contact Us or call us direct on 0808 501 6462.