Best Accounts Receivable Factoring Providers in the UK

Cash flow is a major challenge for many UK businesses. To address this issue, many turn to factoring companies to sell their accounts receivable (AR) for immediate capital. However, picking the right factoring company can be challenging because there’s a wide range of options available.

In this article, we’ll walk you through some of the best accounts receivable factoring companies to consider in the UK. Additionally, we’ll highlight some of the major benefits and shortcomings of accounts receivable factoring, and how to choose an accounts receivable line of credit.

We’ll also cover how Wise Business can help you as a cost-effective way to send business payments and receive money from abroad in multiple currencies, with conversions using the mid-market exchange rate.

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How does selling accounts receivable work?

Let’s say a construction company based in Portsmouth has cash flow issues because its customers are late on payments. This company then decides to sell accounts receivable to a factoring company.

Here’s what the process would look like:

1. The construction company offers an outstanding invoice worth £50,000 to a factoring company.
2. The factor verifies the construction company’s credit customers' creditworthiness.
3. The factor pays 70% to 90% of the outstanding invoice’s total value (£40,000) within 24 to 48 hours.
4. The factor handles collections from the construction company’s customers and collects 100% of the receivables.
5. Once the customer pays, the factor deducts its fees and pays the construction company the remaining balance.

Benefits and drawbacks of factoring accounts receivable

AR factoring can be a game-changer for small businesses that want to improve their cash flow. However, it also has some potential risks worth addressing.

Benefits of factoring accounts receivable

Here are the major advantages of factoring your AR:

• You’ll get quick access to cash: Factoring allows small businesses to sell their AR in exchange for capital. With this capital, companies can cater to their short-term needs, such as funding business operations or buying new inventory without waiting for customers to pay invoices.
• It offers a seamless application process: Unlike traditional bank loans, AR factoring is straightforward and doesn’t need collateral or credit history records. The factor evaluates your customer’s creditworthiness and pays the advance between 24 and 48 hours.
• It mitigates risks of non-payment: With non-recourse factoring, the factor assumes full responsibility for the invoices they purchase. This means that if the customer doesn’t pay their invoice, the factor bears the loss.
• It lets you outsource collections management: The accounts receivable factoring company is responsible for collecting payments from customers on behalf of the business. This means you can delegate processing invoices, collections, and credit risk assessments to the factoring companies.
• You’ll have no debt obligations: AR factoring doesn’t create a debt obligation on the balance sheet. This is because factoring isn’t the same as taking a loan. Instead, you’re selling accounts receivable to a third party for upfront cash.

Drawbacks of factoring accounts receivable

Although AR factoring benefits businesses in many ways, it has some major shortcomings:

• Reduced profit margins: Factoring means you’re selling your AR at a discounted rate. Additionally, factors usually charge processing (1% to 4%) and service fees, which increase the longer it takes customers to pay their invoices. These fees can eat into your company’s profit margin.
• Negatively impact customer relationships: Factoring companies are in charge of collections, which means they are in direct contact with your customers. If the factor chases payments using unethical means, it could jeopardise the good rapport you’ve built with your customers.
• Increase financial dependence: Factoring can cause over-reliance on factors for capital. This can lead to businesses overlooking other forms of affordable financing which keeps them trapped in factoring.

How to choose an accounts receivable line of credit

Here is a step-by-step guide on how to choose the right AR line of credit (LOC) for your company:

Evaluate your business needs: First, understand why you need a line of credit and what business needs it would help you cover. Is it for paying workers or to fund business operations costs?

Evaluate your accounts receivable: Evaluate your AR to understand payment gaps. Generate an aging report to categorise your outstanding invoices by their due dates. Also, review your customer payment trends to understand their payment patterns.

Research potential lenders: List potential lenders. This can be banks, credit unions, or any other financial institutions that provide AR-backed lines of credit. Compare their advanced rates, draw fees, interest rates, repayment terms, and collateral.

Apply for the accounts receivable line of credit: Complete and submit your application. The lender reviews your application and assesses your creditworthiness and accounts receivable.

Negotiate payment terms before signing: Negotiate with the lender to extend the repayment period or lower interest rates. Also, review other important information such as the lender’s repayment requirement and check if they align with your company’s capabilities.

Best accounts receivable factoring companies in the UK

Some of the best accounts receivable factoring companies in the UK include:

• SME Invoice Finance
• Sonovate
• ABC Finance
• Kriya

SME Invoice Finance

SME Invoice Finance is a factoring company based in the UK, helping small and medium enterprises secure capital. Established in 2014, the factoring company has helped over 42,000 UK businesses secure capital and unlock funds tied up in unpaid invoices.

SME Invoice Finance offers:

• 24-hour funding after approval^¹
• Up to 95% advance of the total value of your invoice^¹
• Selective invoice financing
• Bad debt protection and payroll support

Pricing/fees: Contact SME Invoice Finance for a custom quote

Rating: N/A

Sonovate

Sonovate is a funding platform that’s designed to provide flexible finance solutions for recruitment, consultancies, and labour marketplaces in the UK. This platform provides fast funding options by helping you sell outstanding invoices at a discount.

Sonovate provides:

• Pays up to 100% advance of your invoice value^²
• Bad debt protection on 95% of your net invoice^³
• Built-in invoicing and billing feature
• Dedicated specialist support

Pricing: Contact Sonovate for a custom quote

Rating: 3.7/5.0 (TrustPilot⁴)

ABC Finance Ltd.

ABC Finance Ltd. is a well-respected FCA finance broker that helps UK businesses secure upfront cash from the sales of their ledger. This broker provides an invoice financing online platform where you can compare leading lenders and get the best deals. With this platform, you can apply for an advance in minutes, have offers from multiple lenders and review and compare these offers to ensure you are getting the best deal.

ABC Finance offers:

• up to 95% advance of the total value of your invoice^⁵.
• 24 hours funding after approval
• credit control and collections

Pricing: Contact ABC Finance Ltd. for a custom quote

Rating: 4.8/5.0 (According to TrustPilot⁶)

Kriya

Kriya is an invoice finance company that helps UK businesses turn their unpaid invoices into instant capital.

Kriya provides:

• up to 90% of your invoice's total value^⁷
• 24 hours payout
• transparent fees
• payment collections

Pricing: Contact Kriya for custom quotes

Rating: 4.4/5.0 (According to TrustPilot⁸)

Alternatives to accounts receivable factoring

For companies where AR factoring might not be the best way to get capital, here are other alternatives to consider:

• Accounts receivable financing: This financing option allows you to take a loan from a financial institution using your accounts receivable as collateral.
• Traditional bank loan: Here, a bank provides a loan (a non-revolving credit limit) to you after evaluating your credit scores and financial statements.
• Traditional bank line of credit: A bank provides a revolving line of credit after evaluating your creditworthiness and financial history.

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FAQs - accounts receivable factoring company

Here are some of the most common questions answered:

What is the difference between recourse and non-recourse factoring?

• Recourse factoring: The business is responsible for repaying the factor if the customer refuses to pay the invoice.
• Non-recourse factoring: In case of non-payment, the factoring company assumes the risks.

How much does accounts receivable factoring cost?

The true cost of factoring depends on various factors such as the industry, invoices, customer creditworthiness, and the factoring company’s fees. Factors usually charge between 1% to 5% of your invoice value. There are other additional fees such as service fees, early termination fees, and application fees.

How long does it take to get funding through factoring?

Once your application is approved, funding should be released to you within 24 to 48 hours.

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Sources used:

1. https://www.smeinvoicefinance.co.uk/
2. https://www.sonovate.com/
3. https://www.sonovate.com/products/funding/
4. https://www.trustpilot.com/review/sonovate.com
5. https://abcfinance.co.uk/invoice-finance/factoring/
6. https://www.trustpilot.com/review/abcfinance.co.uk
7. https://www.kriya.co/solutions/invoice-finance
8. https://uk.trustpilot.com/review/kriya.co

Sources last checked on date: 26-Jun-2025