Cost of Factoring Examples

Factoring costs are normally in three parts:

  • Service charge - normally a percentage of turnover or a fixed fee per month.
  • Discount charge - charged on the funding you take, that works in a similar way to interest on a loan.
  • Other charges - there may be further additional charges e.g. for CHAPS transfers.

Below, are examples of the cost of factoring facilities - the examples are indicative only* (we may even be able to improve on them in some cases).

To find out what the actual cost would be for your business please complete an INDEPENDENT QUOTE SEARCH REQUEST or call us on: 03330 113622.

Selective Options

You can opt for a selective facility, where by you choose which invoices to get funding against. This means you are only charged in respect of those invoices so the costs work differently form the examples below - it costs approximately 2% per month.

The examples below are based on you factoring all your invoices, for an entire year.

Factoring Facility Cost Examples

Small Startup Business - £75,000 Sales Turnover Per Annum - Factoring (finance released £10,625 + credit control service)

  • Service Charge - 4% of turnover = £3,000 + VAT per annum
  • Discount Charge - £0 - included in the figure above

  • Equivalent to £23.53 + VAT per month, per £1,000 borrowed

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Small Business - £250,000 Sales Turnover Per Annum - Factoring (finance released £35,417 + credit control service)

  • Service Charge - 1.5% of turnover = £3,750 + VAT per annum
  • Discount Charge - £0 - included in the figure above

  • Equivalent to £8.82 + VAT per month, per £1,000 borrowed

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Medium Sized Business - £1,000,000 Sales Turnover Per Annum - Factoring (finance released £141,667 + credit control service)

  • Service Charge - 0.7% of turnover = £7,000 + VAT per annum
  • Discount Charge - 2.5% over bank base rate - £3,896 + VAT per annum

  • Equivalent to £6.41 + VAT per month, per £1,000 borrowed

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Large Business - £3,000,000 Sales Turnover Per Annum - Factoring (finance released £425,000 + credit control service)

  • Service Charge - 0.4% of turnover = £12,000 + VAT per annum
  • Discount Charge - 2.25% over bank base rate - £10,625 + VAT per annum

  • Equivalent to £4.44 + VAT per month, per £1,000 borrowed

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Your Quotation 

To find out what the actual real cost would be for your business please complete a QUOTATION SEARCH REQUEST or call us on: 03330 113622. 

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*Notes about the indications above 

The above examples assume the outstanding sales ledger to be 2 months sales and funding of 85% of outstanding sales invoice to be provided. The examples use typical numbers of debtors and invoices and do not include ancilliary charges that may be incurred. Bank base rate is assumed to be 0.25%. Other charges are not shown. Fees rounded up to nearest £1.

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