What Percentage Do Factoring Companies Take?
Two charges. A service charge of 0.5-3% of each invoice value (charged when you submit it). Plus a discount charge (interest) of 1-3% above base rate on the amount advanced, charged daily until your customer pays. Total effective cost: 1-5% of each invoice depending on your turnover, customer quality, and how quickly they pay.
Quick Reference
Direct Answer
Factoring companies charge a service fee of 0.5-3% of invoice value plus interest (discount charge) of base rate + 1-3% on the advance. Total effective cost is typically 1-5% of invoice value. Higher turnover and faster-paying customers mean lower rates.
Summary
The two-part fee structure means the total cost depends heavily on how fast customers pay. A customer paying in 30 days costs roughly a third of one paying in 90 days on the discount charge element. Service charges vary by provider and turnover volume — businesses turning over £1m+ typically pay 0.5-1%, while smaller businesses pay 1.5-3%.
This Page Covers
Breakdown of factoring company fees and what determines the percentage you pay
Not Covered Here
Whether it eats margins (see /questions/will-invoice-finance-eat-my-margins/), full cost guide (see /guides/costs/), rate comparison (see /compare/)
Breaking Down the Two Charges
The service charge covers administration — credit checks on your customers, managing the facility, payments processing. It is a flat percentage of each invoice. The discount charge is interest on the money advanced to you, calculated daily. Think of it as rent on the cash. The longer your customer takes to pay, the more discount charge you pay.
What Drives Your Rate Down
Higher annual turnover (£500k+ gets better rates). Creditworthy customers (blue-chip debtors reduce risk). Shorter payment terms (30 days beats 90 days). Clean trading history (no disputes, no bad debts). Multiple customers (not concentrated on one or two). The cheapest providers — Close Brothers and Skipton — start at 0.5% service charge for the right businesses.
Watch for Extra Fees
Some providers add arrangement fees (£500-£2,000 upfront), CHAPS transfer fees (£15-25 per payment), annual review fees, minimum monthly charges, and credit check charges. Always ask for the full fee schedule before signing. Use our calculator to model total cost.
Oliver Mackman
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 7 April 2026