Updated May 2026 · 10 min read
Waiting 45+ days to get paid is expensive. Invoice factoring companies offer a way to turn unpaid invoices into immediate cash — but the fees, minimums, and contract terms vary enormously. Here are the top 8 factoring companies ranked, plus the honest answer on whether factoring is right for freelancers and small businesses.
Before comparing providers, understand the 7 factors that determine the real cost and fit:
UK · Traditional factoring
Advance rate
Up to 90%
Fee range
1–3%
Minimum
£50K/yr turnover
Best for: Established UK SMEs needing full AR outsourcing
One of the UK's largest and most established factoring providers. Sector specialists including transport and staffing.
UK · Selective invoice finance
Advance rate
Up to 90%
Fee range
0.5–2%
Minimum
No strict minimum
Best for: UK SMEs wanting flexible, selective invoice finance
Choose which invoices to finance. No long-term contracts. Fast online onboarding. Now rebranded as Kriya.
US · Bank-backed factoring
Advance rate
Up to 90%
Fee range
0.5–3%
Minimum
$30K/yr revenue
Best for: US businesses wanting bank security with competitive rates
Subsidiary of The Southern Bank Company. FDIC-insured. Competitive rates due to bank backing.
US · Online invoice factoring
Advance rate
Up to 90%
Fee range
~0.25–1.7% per week
Minimum
$10K/mo invoicing
Best for: US SMEs wanting fast, online-first invoice finance
Fully online application. Fast decisions. Note: weekly fees can compound — calculate effective APR carefully.
US · AI-based invoice financing
Advance rate
Up to 100%
Fee range
4.66–8.99% per draw (12 wks)
Minimum
$100K/yr revenue
Best for: US small businesses wanting fast AI-driven decisions
Uses bank/accounting data for fast AI underwriting. Revolving credit line against invoices. No long contracts.
US · Full-service factoring
Advance rate
Up to 90%
Fee range
1–5%
Minimum
$20K/mo invoicing
Best for: US transport, staffing, and manufacturing businesses
Sector specialisation in transport and staffing. Handles all AR collections. Full-service.
International · Cross-border invoice finance
Advance rate
Up to 90%
Fee range
1.5–3.5%
Minimum
$100K per invoice
Best for: Large companies with international B2B invoices ($100K+)
Specialist in cross-border trade finance. Minimum invoice size means unsuitable for small businesses.
UK · Contractor/agency factoring
Advance rate
Up to 100%
Fee range
~1–2%
Minimum
No stated minimum
Best for: UK staffing agencies and contract recruitment firms
Specialist in contractor and staffing sector. Integrates with timesheet software. Handles payroll funding.
⚠️ Honest assessment
Most invoice factoring companies require £10,000–£50,000+ per monthin invoices. The average solo freelancer invoices £3,000–£8,000/month. This means most factoring providers won't accept freelancer clients — and those that do often charge higher fees to compensate for the lower volume.
| Factor | Freelancer solo | Small business (2–10 staff) |
|---|---|---|
| Monthly invoice volume | £2K–£10K | £20K–£200K |
| Meets factoring minimums? | ❌ Usually not | ✅ Usually yes |
| Cost as % of revenue | High (3–5%+) | Moderate (1–3%) |
| Client relationship impact | High — clients contacted by factor | Manageable |
| Better alternative | Automated reminders | Either works |
The reason most freelancers consider factoring is simple: clients pay late. The median invoice is 45 days overdue by the time it's collected. But you don't have to sell your invoice at a 2–5% discount to solve this problem.
Automated payment reminders — sent at the right intervals in a professional tone — can reduce your average collection time by 15+ days without sacrificing any invoice value.
Invoice factoring vs automated reminders:
| Invoice factoring | Chaser reminders | |
|---|---|---|
| Cost | 1–5% of invoice value | €20/mo flat |
| Invoice value retained | 95–99% | 100% |
| Client relationship | Factoring co. contacts client | You stay in control |
| Available to freelancers | Often not (minimums) | ✅ Always |
| Time to setup | Days–weeks | 2 minutes |
| Improves cash flow | ✅ Immediate advance | ✅ Faster payment |
Chaser sends 4 automatically escalating payment reminders — day 3, 7, 14, and 30. Most invoices get paid before the formal stage. Free for your first 3 invoices.
An invoice factoring company purchases your unpaid invoices at a discount, giving you immediate cash (typically 80–90% of the invoice value). The factoring company then collects payment from your client. You receive the remainder minus the factoring fee (1–5%) once the client pays.
Invoice factoring typically costs 1–5% of the invoice value. A £10,000 invoice might cost £100–£500 in fees. Some providers charge weekly rates that compound over time, so always calculate the effective annual rate. Additional fees can include setup fees, minimum volume fees, and early termination fees.
With recourse factoring, you must buy back the invoice if the client doesn't pay — you carry the credit risk. With non-recourse factoring, the factoring company absorbs the bad debt risk. Non-recourse is more expensive but protects you from client insolvency.
Most invoice factoring companies have minimum volumes of £10,000–£50,000 per month, making them unsuitable for most freelancers. A better option is automated invoice chasing — tools like Chaser send escalating reminders that typically get invoices paid 15+ days faster, without selling your invoice at a discount.
With invoice factoring, you sell the invoice to a factoring company who collects from your client. With invoice financing (also called invoice discounting), you borrow against the invoice but remain responsible for collection — your client doesn't know about the arrangement. Invoice financing is typically available at lower cost.