Best five invoice factoring companies for small businesses

Running a small business is exhilarating, but waiting on unpaid invoices? Not so much.

That’s where invoice factoring comes in, turning those pending payments into instant working capital. But with so many options, how do you choose the best invoice factoring company for your needs?

We’ve assessed the very best options on the market to bring you the breakdown you need. That means you’re getting recommendations backed by industry expertise, real-world experience and solid financial credibility.

In this guide, we’ll break down the best invoice factoring companies, what to look for and how to find the right fit for your business. Whether you’re new to small business finance or just looking for a better cash flow solution, we’ve got you covered.

Let’s dive in and find the perfect partner to keep your business thriving!

1. Skipton

Skipton Business Finance is a Yorkshire-based lender specialising in invoice finance solutions for small and scaling UK businesses. Whether you need traditional factoring, recourse options, CHOCS (Client Handles Own Collections) or confidential invoice discounting, Skipton offers one of the most versatile invoice finance packages on the market.

Costs and fees

Skipton’s pricing is customised to each business, but the lack of setup fees and interest-free factoring makes it an attractive option for many small businesses and startups.

• Advance rate: Up to 90% of the invoice value
• Discount fee: Custom
• Service fee: Custom

Read more: How much does invoice factoring cost?

What we like

• Fast funding: get up to 90% of your invoice’s value within 24 hours.
• Interest-free: unlike most providers, Skipton charges no interest on factoring agreements.
• No setup fees: a big win for businesses looking to cut costs.
• Flexible solutions: options for disclosed, recourse, CHOCS and confidential discounting.
• Dedicated relationship manager: personalised support to guide you through the process.

What we dislike

• Turnover requirement: Skipton’s services are only available to businesses with a turnover of more than £250,000.
• Application by phone only: there’s no online application process, which might be inconvenient for some.

Who is it best for?

Small to mid-sized businesses looking for quick access to funds, and with limited budgets to cover interest.

2. Bibby

Bibby Financial Services is a leading global invoice finance provider, supporting over 7,000 businesses across the UK.

Offering a wide range of invoice finance solutions, Bibby provides tailored options for businesses of all sizes, making it a good all-rounder.

Read more: The best recruitment factoring companies

Costs and fees

Bibby offers a simple fee structure, making it easier for businesses to manage their budgets.

• Advance Rate: Up to 100% of the invoice value
• Discount Fee: Custom
• Service Fee: Custom

What we like

• Fast funding: access up to 100% of your invoice value quickly.
• Rolling contracts: flexible 28-day agreements instead of long-term commitments.
• No setup fees: a cost-effective option for businesses looking to improve cash flow.

What we dislike

• Outdated portal: some users find Bibby’s back-office platform a little clunky.
• Custom pricing: no upfront cost details, meaning businesses need to request a quote.

Who is it best for?

Companies looking for industry-specific funding, including those in construction and recruitment.

3. Metro Bank

Metro Bank offers quick, scalable invoice finance solutions, allowing businesses to unlock up to 90% of unpaid invoices within just 24 hours. With no setup fees, no cancellation charges and simple pricing, it’s an excellent choice for companies looking for straightforward, flexible cash flow solutions.

Costs and fees

Metro Bank’s pricing structure makes it easier for businesses to manage cash flow without unexpected costs.

• Advance Rate: Up to 90% of invoice value
• Discount Fee: Custom
• Service Fee: Custom

What we like

• Fast access to funds: receive up to 90% of invoice value within 24 hours.
• No setup fees: a cost-effective solution for businesses of all sizes.
• No cancellation charges: businesses can exit with just 28 days notice.

What we dislike

• Lower funding limits: Metro Bank’s upper funding cap is lower than some competitors (£100,000)
• Limited eligibility details: the criteria needed for businesses to be eligible for the services aren’t clearly stated.

Who is it best for?

Companies needing fast access to cash with no setup or cancellation fees.

4. Optimum Finance

Optimum Finance is a specialist SME lender that offers flexible and bespoke invoice finance solutions to a variety of UK businesses. One of its standout features is that it does not require a minimum turnover, making it ideal for early-stage companies or those without large revenue streams.

Costs and fees

Optimum Finance offers competitive pricing, with the added benefit of a real-time online system to keep businesses informed about their finances.

• Advance Rate: Up to 85% of invoice value

What we like

• No minimum turnover requirement: ideal for startups and small businesses.
• Fast access to funds: receive up to 85% of your invoice value quickly.
• Debtor protection: extra security in case your customers face financial difficulties.
• Real-time monitoring: access to E3, an online system to track your account 24/7.

What we dislike

• Debtor protection comes at an additional cost: while this is a useful option, it may not be ideal for all businesses due to the added expense.

Who is it best for?

Companies seeking real-time monitoring of their finances via the E3 system.

Read more: The advantages and disadvantages of debt factoring

5. GapCap

GapCap is a flexible invoice finance provider that offers businesses the opportunity to access funds as and when they need it. With its selective invoice finance option, GapCap allows companies to raise money against individual invoices on an ad-hoc, contract-free basis. This makes it a great choice for businesses that only need occasional access to cash flow without the commitment of long-term contracts or fixed arrangements.

Costs and fees

GapCap’s pricing is customised based on each business’s specific requirements. There are no setup fees, making it easy for businesses to access finance when needed.

• Advance Rate: Up to 85% of invoice value
• Service Fee: Custom

What we like

• Selective invoice finance: businesses can access funds on a per-invoice basis without long-term commitments.
• Speedy process: GapCap prides itself on offering an application turnaround of just 24 hours.
• Dedicated account manager: this personalised service ensures a smooth and responsive experience.
• No setup fees: you can access funding without upfront costs.

What we dislike

• Six-month trading history requirement: companies must have at least six months of trading history to be eligible for selective invoice finance, which may exclude very early-stage startups.
• Additional fees for add-ons: services like credit protection come with extra fees, which might not be ideal for all businesses.

Who is it best for?

Companies with at least six months of trading history that need quick access to cash flow.

How to make the right choice for your business

Choosing the right invoice factoring company can make a big difference in managing your cash flow and growing your business.

With so many options available, it’s important to consider key factors before making a decision. Here’s what to look for:

• Funding speed: some providers release funds within 24 hours, while others take a few days. If fast cash flow is essential, choose a quick provider.
• Advance rate: look for a provider offering a high percentage of your invoice upfront (typically 70-100%). Higher rates mean more immediate cash but may come with higher fees.
• Fees and costs: check for transparent pricing with no hidden fees. Compare service fees, discount rates and any extra charges like credit protection.
• Type of invoice finance: factoring means the provider handles collections, while discounting keeps the process confidential but requires you to chase payments. Pick what suits your business.
• Contract terms: some companies require long-term contracts, while others offer flexible, contract-free options. If you only need occasional funding, look for selective invoice finance.
• Industry experience: some providers specialise in sectors like construction or recruitment. A company that understands your industry can offer better support.
• Eligibility requirements: some require a minimum turnover (for example, over £100,000 per year), while others work with startups. Make sure you qualify before applying.

Final thoughts

Finding the right invoice factoring company can be a game-changer for your small business, giving you fast access to cash without the headache of chasing late payments.

Whether you need flexible funding, top-notch customer service or the best rates, there’s an option out there for you.

Take the time to compare your choices, read the fine print and pick the provider that fits your business like a glove. After all, smoother cash flow means more time to focus on what you do best – growing your business!

Lucy Nixon - content writer

With 10 years experience in the digital marketing industry, Lucy is a content writer specialising in ecommerce, website building and all things small business. Her passion is breaking down tricky topics into digestible and engaging content for readers. She's also committed to uncovering the best platforms, tools, and strategies, researching meticulously to providing hand-on tips and advice.