Invoice Factoring
Release cash from eligible unpaid invoices while an experienced factoring provider supports customer collections.
Shadowfax helps UK businesses compare factoring facilities by advance mechanics, service quality, pricing, customer concentration and contractual flexibility.
Improve cash flow and reduce the credit-control burden
Invoice factoring can solve two linked challenges: cash tied up in the sales ledger and the time required to chase customer payments.
The provider advances an agreed proportion of eligible invoices and normally manages collections. When customers pay, the balance is reconciled after fees and adjustments.
The quality of the provider’s service matters. Collection style, reporting, query handling and customer communication should fit the way your business wants to be represented.
Practical invoice finance guidance from a UK-based broker
We support businesses throughout the UK and understand that factoring is both a finance decision and a customer-service decision.
We compare the commercial terms, operational fit, customer concentration, eligibility rules and service model rather than looking only at a headline advance percentage.
Discuss your requirements:
0208 154 6052
How invoice factoring works
1. Supply and invoice
Deliver the product or service and raise an eligible B2B invoice.
2. Submit the ledger
Provide invoice and ledger information through the agreed reporting process.
3. Receive funding
Draw an agreed percentage of eligible invoice value, subject to reserves and limits.
4. Credit control
The factor contacts customers and manages agreed collection activity.
5. Customer payment
Customers pay into the collection account specified by the facility.
6. Reconciliation
The remaining reserve becomes available after payment, fees and adjustments.
Who invoice factoring may suit
Growing SMEs
Businesses with B2B invoices that need working capital as turnover rises.
Businesses without a large finance team
Companies that value outsourced collections and ledger support.
Recruitment and staffing
Agencies balancing payroll commitments with later client receipts.
Transport, security and services
Businesses with regular invoicing and recurring operating costs.
Important: Funding availability depends on eligible invoices, contracts, customer quality, disputes, concentrations, financial information and lender approval. Not every invoice will necessarily be funded.
What to compare before choosing a provider
Advance and availability
Compare the usable cash after reserves, concentrations and ineligible debts.
Service and collections
Understand who contacts customers, how queries are handled and how performance is reported.
Total cost and contract
Review service and discount charges, minimum fees, notice periods and termination terms.
Compare invoice finance and wider funding options
Invoice finance hub
Compare the wider range of invoice finance structures.
Explore this option →Invoice Finance London
Explore the flagship London working-capital guide.
Explore this option →Funding calculators
Model indicative funding and business-finance scenarios.
Explore this option →Compare funding options
Review product structures, uses and trade-offs.
Explore this option →Commercial loans
Consider fixed-term borrowing for investment or working capital.
Explore this option →Asset finance
Fund vehicles, machinery and equipment.
Explore this option →Why speak to Shadowfax?
The strongest factoring solution combines dependable funding with a collection service that protects commercial relationships.
We help organise the information lenders need, compare realistic structures and support the process through proposal, due diligence and completion.
- Independent provider comparison
- Funding and credit-control review
- Customer concentration analysis
- Contract and notice-period review
- Bad-debt protection options
- Switching-provider support
- Sector-aware presentation
- UK-based broker support
Invoice Factoring FAQs
These answers provide general guidance. Facility terms, eligibility, pricing and availability depend on the full circumstances and lender assessment.
What is invoice finance?
Invoice finance releases working capital against eligible unpaid business-to-business invoices before customers pay.
How much funding may be available?
Availability depends on eligible invoices, advance percentage, customer concentration, ageing, disputes and lender reserves.
How quickly can funding be released?
Timing depends on onboarding, verification, legal documentation, customer checks and the completeness of information. No completion time is guaranteed.
Which invoices are normally eligible?
Lenders generally prefer completed, undisputed business-to-business sales with clear evidence of delivery and enforceable payment obligations.
Can overseas invoices be included?
Some providers support export debts, subject to country, currency, customer quality, concentration and credit protection.
What happens when the customer pays?
Customer receipts reduce the funded balance and the remaining reserve is made available after fees, adjustments and facility terms.
What are concentration limits?
Concentration limits restrict how much funding depends on one customer or connected group, reducing the lender’s exposure to a single debtor.
What happens if an invoice is disputed?
A disputed invoice may become ineligible, reducing availability until the dispute is resolved or the lender is satisfied.
What is recourse invoice finance?
Under recourse arrangements, the business remains responsible if a customer does not pay within the agreed recourse period or the debt becomes ineligible.
What is bad debt protection?
Bad debt protection may cover approved debts against specified insolvency or protracted-default risks, subject to limits, exclusions and compliance conditions.
Can a start-up use invoice finance?
Potentially. Some providers consider newer businesses where invoices, customers, contracts and management capability are acceptable.
Can a business switch providers?
Yes. A switch requires coordination of balances, security, customer notices where relevant, legal documentation and the new lender’s due diligence.
What information will a lender request?
Typical information includes accounts, management information, aged debtor and creditor reports, customer terms, contracts, bank statements and funding requirements.
What fees should be compared?
Compare service fees, discount charges, minimum fees, arrangement costs, audit charges, credit protection and any early termination or additional service fees.
Can invoice finance grow with turnover?
Potentially. Availability can rise as eligible invoices increase, subject to facility limits, concentrations and lender approval.
Can invoice finance be combined with asset finance?
Yes, subject to security and lender consent. The facilities may serve different purposes: receivables for working capital and asset finance for equipment.
Can only selected invoices be funded?
Some providers offer selective or single-invoice products, though pricing and eligibility differ from whole-turnover facilities.
Do customers have to be creditworthy?
Customer quality is central because repayment comes from the debtor ledger. Poor credit, disputes or slow payment can affect eligibility and availability.
Can public-sector invoices be funded?
Potentially, subject to contract terms, assignability, evidence of delivery and lender criteria.
Do I need property security?
Invoice finance is primarily supported by receivables, but debentures, guarantees or other security may be required.
What is invoice factoring?
Invoice factoring combines funding against eligible invoices with provider-led credit control and collections.
Will customers know about factoring?
Usually yes. Factoring is commonly disclosed and customers typically pay into an account controlled by the factor.
Who manages credit control?
The factor normally manages agreed collections activity, although responsibilities and tone should be set out before commencement.
Can factoring reduce administration?
It can reduce the internal burden of collections, but the business still needs accurate invoicing, query resolution and ledger information.
Is factoring suitable for small businesses?
It can suit smaller or growing businesses that want both working capital and credit-control support.
Can factoring support rapid growth?
Potentially. Funding may increase with eligible sales, while outsourced collections can support a growing ledger.
How do I protect customer relationships?
Review the provider’s collection style, escalation approach, reporting and sector experience before choosing a facility.
Can factoring include credit protection?
Some facilities offer bad debt protection for approved customers, subject to policy terms and compliance.
Is factoring confidential?
Factoring is generally disclosed. Businesses seeking confidentiality may consider invoice discounting if eligible.
Why use a broker for factoring?
A broker can compare provider appetite, service approach, pricing, advance mechanics and contract terms.
Discuss Invoice Factoring
Tell us about turnover, customers, payment terms, ledger and credit-control needs. We can help compare suitable factoring providers.
Shadowfax Funding Solutions Limited is a credit broker, not a lender. Finance is subject to status, lender criteria, due diligence and formal approval. Fees, security and guarantees may apply.