Invoice Factoring Companies UK 2026

Invoice factoring is a form of invoice finance where a UK business sells its unpaid B2B invoices to a factoring company. The provider advances around 80% to 90% of the invoice value, usually within 24 to 48 hours once your account is set up, then collects payment from your customers directly and releases the balance, minus its fees, once they pay. Because the provider manages collections, factoring is disclosed: your customers know a factor is involved.

With factoring the provider runs credit control and chases your customers, and the arrangement is usually disclosed. With invoice discounting you keep control of your own collections and the facility is normally confidential, so customers never know. Factoring suits smaller businesses without a dedicated credit-control team; discounting suits larger, established firms with their own finance function.

Factoring has two charges: a service charge of roughly 0.75% to 3% of invoice value (it is higher than discounting because the provider also runs collections), and a discount charge of the Bank of England base rate (4% as of 5 November 2026) plus a margin on the cash advanced.

Across the UK market, the discount fee on the amount advanced is usually 1.5% to 3% above Bank of England base rate, according to Novuna Business Finance (read 30 October 2026). Each lender quotes its own rate. Total effective cost is typically 1% to 3% of annual turnover.

On Market Invoice's editorial scoring, the top-rated UK factoring companies for 2026 are Sonovate, Close Brothers Invoice Finance, Bibby Financial Services, Ultimate Finance, Aldermore Invoice Finance. Ranking weights overall rating, then transparency, then setup speed. The best fit depends on your turnover, sector and whether you need a specialist (for example construction or recruitment).

No one publishes a size ranking for factoring on its own. The nearest public measure is the number of live charges (debentures) a lender holds at Companies House, which counts factoring and discounting clients together and says nothing about money lent. On that measure, in our Lender League Table (scan to 22 October 2026), the biggest lender that still lists factoring is Bibby Financial Services, with 4,277 live charges.

HSBC, NatWest (RBS Invoice Finance) and Lloyds hold more, but they now list invoice discounting only. Our ranking in the table above is our own editorial rating, not size.

Standard factoring is disclosed, meaning your customers are told their invoices have been assigned and they pay the factor directly. If confidentiality matters, confidential invoice discounting keeps collections in your name and customers are never aware a facility exists. Some providers also offer confidential factoring for stronger businesses.

The main disadvantages of invoice factoring are cost and disclosure. The service charge of about 0.75% to 3% of invoice value makes it dearer than invoice discounting, and because the provider chases payment your customers know a factor is involved. Contracts often run 12 to 24 months with a minimum monthly fee, and concentration limits can cap how much you draw against any single large customer.

It suits businesses that value having collections handled more than they mind the higher cost and customer contact.

Invoice factoring is a good idea when you sell to creditworthy business customers on long payment terms and you either lack a credit-control team or would rather the chasing was handled for you. Once your account is set up, it usually turns unpaid invoices into cash in about 24 to 48 hours. It is a weaker fit if your margins are thin, your customers would react badly to a third party contacting them, or you already run strong credit control, in which case confidential invoice discounting is usually cheaper.

Say you raise a £10,000 invoice to a customer on 60-day terms. You send a copy to the factoring company, which advances 85%, or £8,500, into your account within a day or two. The provider then collects the £10,000 from your customer over the 60 days. When the customer pays, you receive the remaining £1,500 balance minus the service charge and the discount charge on the £8,500 advanced.

On a 1.5% service charge that is about £150, plus a few pounds a day of discount charge while the cash is drawn.