What is Debt Factoring and How Does It Work?

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  • Debt factoring is another term for invoice factoring - where a business will raise an invoice for work completed, pass this to the debt factoring provider who then chases the payment from the debtor on behalf of their client.

    The business will be given up to 85% of the invoice value almost immediately from the point of raising the invoice, therefore reducing the cash deficit for the small business.

    The debt factoring company will chase the debtors for payment of the invoices and once received will give the remaining 15% to the small business, minus their fees for providing this service.

    Debt factoring is proven to help businesses grow and prosper and is an excellent alternative to a bank overdraft.

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The debt factoring process - revolutionised with our digital onboarding process


We are an award winning debt factoring company

Best Invoice Factoring Provider 2020

Best Invoice Factoring Provider 2019

Best Invoice Finance Service 2018


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Please note that costs are an estimate only and are based on the entered values. Your final quote may change once a Business Development Manager has assessed your business in more detail.

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Faster Simpler Smarter

Faster Simpler Smarter

Smarter, Faster and Simpler Debt Factoring with Hitachi Capital Invoice Finance.

Watch this quick video to see how we are revolutionising the Cashflow Finance industry.


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Debt Factoring FAQs

Is Debt Factoring expensive?

The cost of debt factoring is split in to three key areas:

  1. A set up fee for the administration of establishing the facility.
  2. A service fee which covers the admin costs and management related to your account, which is then charged as a percentage of your gross turnover.
  3. A finance fee which is the cost of the money you draw down. This is charged daily against your outstanding balance.

All reputable finance providers will be transparent about the fees and costs related to the facility prior to signing the agreement.

Is Debt Factoring long term?

Debt Factoring can be both a long and short term form of borrowing. The majority of businesses incorporate Debt Factoring in to their general business operations, with associated costs factored into overall profit margins, tending to view the facility as more of a long term solution.

What is Debt Factoring used for?

There are a variety of reasons companies utilise Debt Factoring services for their business. For starters, Debt Factoring helps companies reduce their cash flow concerns by receiving payment of invoices straight away. Customers who take a while to process your invoice payment can put a strain on your cash flow, and Debt Factoring with Hitachi Capital Invoice Finance gives businesses an option to receive cash in 24 hours, as opposed to waiting 30, 90 or even 120 days to get paid.

 


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With Hitachi Capital Invoice Finance, we handle your credit control, allowing you to concentrate on other areas of the business instead of chasing up late payments.

As your business grows, so does the available funding. With Debt Factoring you don’t need to negotiate new terms as your flexible funding line increases with your turnover.

What are the benefits of Debt Factoring?
    • Improved cash flow - release money tied up in unpaid invoices and boost your cashflow
    • Flexibility - your funding line increases at the same rate as your turnover meaning that you don’t need to renegotiate terms
    • Save time - relieve your business of the burden of credit control and concentrate on your core business 
    • Bargaining power - Debt Factoring can help you to negotiate better terms with your suppliers
    • Faster growth - grow your business at a much faster rate due to the flexible funding line