Factoring and invoice discounting

Factors' requirements vary, so what follows is an indication and not a rigid list. You may find a factor even if the following criteria are not met.

What makes a business suitable for factoring?

Your business may be suitable for factoring and will benefit most if it has:

• an annual turnover of at least £50,000, although some factors will consider start-ups and smaller businesses
• a good spread of customers - there may be funding restrictions if a single customer accounts for more than about a third of turnover
• simple, non-contractual debt that is easily proven
• low levels of debt more than 90 days overdue

What makes a business unsuitable for factoring?

Your business may not be suitable for factoring if it:

• sells to the public - factoring is only available for sales to commercial customers
• has too many small invoices
• has too many disputes and queries
• is not a sound, reputable and trustworthy business
• has customers that make part payments or stage payments
• has complex contractual arrangements or warranty provisions