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How much does a factoring facility cost?

Factoring charges are made up as follows:

  • Service fee: The factoring provider charges a service fee expressed as a percentage of the total volume of invoices factored which usually ranges from 0.5-3% depending on the volume and nature of your business.

This is a workload related charge. The number of customers and the number of invoices you raise has a direct effect on this charge.

  • Interest charge: An interest charge is applied to the monies lent by the factoring provider to you and compares favourably with overdraft rates. The cost of a factoring facility is usually up to 3% over base rate for the money borrowed, although there is often a minimum charge applied.
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