• How Does Body Shop Factoring Work?

    Car repairers, and car crash repair specialists, often use body shop factoring to release the money tied up in unpaid sales invoices.

    Although their invoices tend to be to insurance companies, which can be of good standing, there can often be a delay in receiving payment, which can mean waiting 60 days or even more in order to receive payment for a repair that has already been completed. This can place cash flow pressures on the company as the body shop has to pay for spare parts, labour and ongoing regular overheads - often before they receive the cash from the sale.

    How Does Body Shop Factoring Work?

    The way that body shop factoring works is as follows.

    Firstly you choose which invoices or insurers you want to raise finance against. You have no obligation to factor any of your invoices, or to ever use the service again. Also there are no set up costs or renewal fees to worry about.


    When you take on a repair, you carry out the work and then put together a pack of documentation for the factoring company. Typically, this will include your sales invoice to the insurance company, which still grants them the normal credit terms that they expect. This will be accompanied by an authority from the insurance company, a copy of any repair estimates that may have been applicable to the work, and a satisfaction note signed by the customer.

    Whilst that may sound like more paperwork than you may be used to producing, it means that your sales invoice can then be sold to the factoring company, without recourse back to you.

    The Charges And The Finance

    The factoring company will then pay you 100% of the face value of your invoice, less a charge to provide the service. Typically, this charge will be approximately 3% of the value of your invoice.

    The factoring company then takes on the task of collecting in that invoice. No matter how long it takes them to recover the money, your fees stay the same i.e. the 3% that you paid up front. You don't pay any additional interest or fees. Even if they fail to recover the value of the invoice from the insurer, they will have no recourse back to you, which means you get to keep the 97% used in this example (providing you accept the bad debt protection option - and assuming that you have not raised a fraudulent invoice).

    Contact Sean on 03330 113622 to find out more about how body shop factoring works.

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Examples of just a few of our finance partners:

ultimate finance group
leumi abl
funding invoice