The service costs of a factor vary greatly depending on your needs. Costs are usually broken down as such:

• Service Charge. A service charge is applied by the invoice factor to cover their administrative costs. The value of this charge can vary greatly depending on what management of your sales ledger entails. If it involves a large number of credit checks then the cost will be more.
  
  
• Interest Charges. Interest charges are applied to the advances on the invoices you raise. The charges are usually a few percent above base rate.

However, if your company has a lower turnover e.g. £500k, then using a factor will avoid you having to employ someone to administer your receivables, performing such things as credit checks, invoice raising and credit insurance.

When you use an invoice factoring service you are usually passing the post sales management of commercial issues with your clients over to the factoring company. Ensuring that you have a relationship with a factor that will provide good enough interface for your clients is also key to your choice.

To get an invoice factoring quote click here.

Invoice Factoring