Factoring and invoice discounting

What makes a business suitable for factoring?


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