What Percentage Do Factoring Companies Take?

Two charges. A service charge of 0.5-3% of each invoice value (charged when you submit it). Plus a discount charge (interest) of 1-3% above base rate on the amount advanced, charged daily until your customer pays. Total effective cost: 1-5% of each invoice depending on your turnover, customer quality, and how quickly they pay.

Breaking Down the Two Charges

The service charge covers administration - credit checks on your customers, managing the facility, payments processing. It is a flat percentage of each invoice. The discount charge is interest on the money advanced to you, calculated daily. Think of it as rent on the cash. The longer your customer takes to pay, the more discount charge you pay.

What Drives Your Rate Down

Higher annual turnover (£500k+ gets better rates). Creditworthy customers (blue-chip debtors reduce risk). Shorter payment terms (30 days beats 90 days). Clean trading history (no disputes, no bad debts). Multiple customers (not concentrated on one or two). Skipton Business Finance and Close Brothers do not publish a rate either: both price each facility individually. The single biggest lever, though, is which product you use: our invoice factoring vs invoice discounting comparison shows discounting costs a fraction of factoring because you run credit control yourself.

Watch for Extra Fees

Some providers add arrangement fees (£500-£2,000 upfront), CHAPS transfer fees (typically £15-30 per payment), annual review fees, minimum monthly charges, and credit check charges. Always ask for the full fee schedule before signing. Use our calculator to model total cost.