Spot Factoring for UK Businesses (2026): How It Works, Costs and Eligibility

Spot Factoring at a Glance

Spot factoring turns one unpaid business-to-business invoice into cash now and leaves the rest of your sales ledger where it is. You choose the invoice, the funder checks your customer at least as hard as it checks you, and most of the value lands in your account within a day or two. The balance follows when your customer pays, less the charge.

That is the product in a paragraph. Everything the name does not settle is where the money and the surprises live, which is why we classified every provider in this guide by the structure it actually sells rather than by the name on its product page. Two funders can both sell you “spot factoring” and hand you completely different arrangements: one tells your customer and collects the debt itself, the other never contacts them at all.

• One invoice, or a few you pick. Your remaining invoices stay outside the deal, and you keep collecting them yourself.
• No ongoing facility, in the true version. Several providers sell a standing facility under the same words, so check whether you are committing to a term or a volume.
• Your customer may be told, and may be chased by a stranger. In a genuine factoring arrangement the funder collects. Some products sold as spot finance leave collection entirely with you.
• Charges are quoted on bases that do not compare. A flat percentage of invoice value and a daily rate on the amount advanced are not the same measurement, and neither is a service charge plus a discount charge.
• Your customer’s credit standing usually matters more than yours. The funder is buying their promise to pay, not your balance sheet.
• Used often, it stops being the cheap option. The per-invoice pricing that makes one-off use sensible is what makes repeated use expensive.

How the money moves: choose an invoice → the funder verifies it and credit-checks your customer → you receive the advance → your customer pays → the balance is released, less charges.

What Is Spot Factoring?

Spot factoring is invoice finance bought one transaction at a time. You assign a single invoice, or a small number you have chosen, and you take most of the money straight away instead of waiting out your customer’s payment terms. Everything else you are owed stays yours to collect.

In a true factoring arrangement the funder also takes over collection, which means your customer receives a notice of assignment and pays the funder rather than you. That is the part readers rarely expect, and it is the part the product name does not decide. Providers apply “spot factoring”, “single invoice finance” and “selective invoice finance” to arrangements that behave quite differently once you read the agreement, so the contract mechanics matter far more than the label on the web page.

We put it more bluntly than most of the market does. Comparing these products by name, or by whoever advertises the highest advance percentage, is how businesses end up with a funder writing to their largest customer when they assumed nobody would ever know.

Before you accept a spot-finance quote, get these in writing:

• Which invoices you can select, and whether the funder can decline one after approving you.
• Whether you can genuinely use it once, or whether the agreement carries a minimum term, a minimum volume or a monthly charge.
• Whether your customer will be notified.
• Who performs credit control, and whose name appears on the reminder letters.
• Where your customer is told to send the payment.
• Whether the funding is recourse or non-recourse, and precisely what the non-recourse cover excludes.
• What the fee becomes if your customer pays 30 days late.

Spot Factoring vs Selective Invoice Finance

The British Business Bank draws the cleanest line available: selective invoice finance lets a business finance selected customer accounts, while spot factoring lets it finance distinct individual invoices. The unit of choice is the whole distinction. One picks customers, the other picks invoices.

We use that as the neutral starting point rather than the final word, because the market does not follow it. Penny sells a product it calls Spot Invoice Financing alongside a separate Confidential Invoice Discounting product, and both will fund a single invoice. Novuna publishes a spot factoring page and a selective invoice finance page describing arrangements that overlap heavily. Treat the two terms as a family rather than opposites, and settle the question by reading the mechanics rather than the heading.

BusinessExpert taxonomy, built from the British Business Bank distinction and the provider terms verified for the table further down this page. Individual providers depart from it, which is the point.

Spot Factoring vs Single Invoice Finance

“Single invoice finance” describes what the money does rather than how the contract works. It tells you the funding attaches to one invoice. It tells you nothing about whether the funder buys the debt, notifies the customer, or collects.

Several products sold that way behave much more like selective invoice discounting than like factoring. Triver is the clearest example we found: it funds one invoice at a time, and it states plainly that it does not contact your customers, who carry on paying you as normal. That is a confidential arrangement wearing a single-invoice label, and if you had shortlisted it as “factoring” you would have mispriced the effect on your customer relationships entirely.

Spot Factoring vs Whole-Ledger Factoring

Whole-ledger factoring puts most or all of your eligible receivables into one facility, usually for a contracted term, and hands your sales ledger and credit control to the funder. You stop chasing payments, and you pay for that on every invoice whether you needed the money or not.

Spot factoring inverts both halves of that trade. You pay only on the invoices you fund, and you keep the ledger, but you pay more per funded invoice and you get no relief from chasing everything else. The honest summary is that spot factoring is the more expensive way to buy a small amount of a thing, and whole-ledger factoring is the cheaper way to buy a lot of it. Our selective versus full facility comparison works through where the crossover sits.

How Spot Factoring Works

The sequence is short, and the two steps that decide how it goes are not the ones businesses ask about. The underwriting check on your customer settles whether you get funded at all, and the payment step settles whether your customer ever finds out.

Choosing an Eligible Invoice

You start with a completed business-to-business sale where the goods or services have been delivered and the money is still outstanding. Not every invoice qualifies, and the reasons are rarely obvious from the invoice itself: work that is only part-finished, a customer who has already queried the amount, or payment terms far longer than the funder’s ceiling will all stop it.

Funders also set the boundaries of what they will look at. Triver funds individual invoices from £100 to £100,000, on payment terms between 10 and 120 days, within a total facility of up to £700,000. Penny works from £500 up to £500,000 per invoice. Those brackets do more shortlisting than any advertised rate, because an invoice outside them is not a pricing question at all.

How the Provider Checks Your Customer and Invoice

We rate this as the step that decides most applications, and it is the one most explanations skip. The funder is buying a debt owed by your customer, so your customer’s ability to pay carries more weight in the decision than it would with an ordinary business loan. A profitable supplier with a shaky debtor can be declined where a struggling supplier with a blue-chip debtor is approved.

Expect the funder to look at whether the invoice is genuine and the work actually finished, what your payment terms say, whether your customer has raised any dispute, how creditworthy that customer is, how much of your turnover sits with them, how old the invoice is, and whether your contract with them restricts assignment at all. Verification can mean contacting your customer directly to confirm the invoice, which is worth knowing before you promise anyone that nothing will change at their end.

The Advance

The funder releases an agreed proportion of the invoice rather than the whole thing, and holds the rest back until your customer settles. There is no universal advance rate, whatever the market’s habit of quoting “up to 90%” suggests. We checked what four providers actually publish and the figures do not converge on anything like a market norm. Triver states you will typically receive 99% of the invoice value upfront. Kriya, a UK lender whose invoice finance funds invoices individually, advertises up to 90%. Penny does not publish an advance rate at all.

Advance rate is also the field where provider marketing is least reliable, so treat a headline figure as the best case the funder has ever done rather than your number. We go through how advance rates are actually set in our guide to advance rates.

How Your Customer Pays

We compared what four providers publish about this step, and they describe three different customer experiences. What happens depends on the structure you bought, not on the word “factoring”. In a disclosed factoring arrangement your customer receives a notice of assignment, pays the funder directly, and hears from the funder if the payment is late. In a confidential arrangement your customer pays you exactly as before and the funder recovers its money from you.

Triver settles by direct debit from the business once the customer has paid, which is a materially different experience for your customer: as far as they are concerned, nothing happened. Penny’s factoring product has customers pay Penny directly, while its discounting product leaves the relationship untouched. Same market, same invoice, two different phone calls to your account manager.

The Final Settlement

Once the invoice is paid, the funder releases what it held back and deducts its charges. The arithmetic is simply the invoice value, less the advance you already had, less the fee.

We flag the timing here because on a time-priced deal the fee is not fixed at the point you sign, and payment can be early or late. A flat percentage does not care how long your customer takes. A daily rate cares enormously, and that difference is worth more money than most advance-rate comparisons.

How Much Does Spot Factoring Cost?

There is no market rate for spot factoring, and any page that gives you one has averaged numbers that were never measured the same way. A provider quoting 2% of invoice value, one quoting 0.06% per day on the amount advanced, and one splitting a service charge from a discount charge are describing three different measurements. Until you convert them, you are comparing nothing.

So we have not published a market range. What follows is the three charging methods, then the same £50,000 invoice priced under each of them, so you can see what your own quotes actually mean.

The Three Charging Methods

We have put the question to ask beside each method, because the method rather than the rate is what makes two quotes incomparable.

Triver publishes a daily rate, from 0.06% per day, with a minimum upfront charge equal to 10 days of fees and a floor of £18. Novuna advertises “rates from 0.5%” without stating the basis. Kriya and Penny publish no rates at all, quoting per deal. Checked 21 August 2026.

Worked Cost Examples on a £50,000 Invoice

Take a £50,000 invoice, a 90% advance of £45,000, and a customer who pays 45 days after funding. These are BusinessExpert calculations using three realistic quote shapes, not quotations from any named provider.

BusinessExpert calculation, stated before VAT. See the VAT section below, because the three quotes do not carry the same VAT treatment. Net cash on day one is £45,000 under all three.

Quote C looks like the most expensive of the three, because 1% plus 9% reads as two charges rather than one. Once we normalised them it is the cheapest, by £250 against Quote A. That gap is the whole argument for doing this arithmetic before you sign rather than after.

Then we re-ran the same three quotes with everything else held still and the customer paying 30 days late, at 75 days rather than 45.

BusinessExpert calculation on the same £50,000 invoice and £45,000 advance, before VAT.

The ranking reverses. At 45 days the daily-rate quote beats the flat fee; at 75 days it costs £775 more. Nothing about the quotes changed, only your customer’s behaviour, and that is exactly the variable you have least control over. If the debtor in question is the one who always pays a month late, the flat fee is the safer purchase even when it is not the cheapest one on the day.

What the Cost Takes From Your Margin

A fee measured against the invoice tells you very little on its own. We measure it against the gross profit on the job instead, because that is the number the fee is actually coming out of, and the decision usually makes itself. The calculation is the financing cost divided by the gross profit from that piece of work, times 100.

Take the £1,250 fee from Quote A. On a £50,000 invoice carrying a 40% gross margin, you are surrendering 6.25% of £20,000 of gross profit to get paid early. On the same invoice at a 10% margin, that fee is 25% of the £5,000 you made. One of those is a sensible price for solving a cash-flow problem. The other means a quarter of the job’s profit went to a funder, and a business doing that routinely on thin-margin work is financing its way toward a loss.

This is also the calculation that answers “is spot factoring expensive?” more honestly than any percentage does. It is expensive relative to a bank facility and cheap relative to losing the contract you could not fund.

Does VAT Apply to Spot Factoring Fees?

Partly, and the split is set out by HMRC rather than by your provider. We took it from the notice itself, because provider summaries of this are unreliable in both directions. Under VAT Notice 701/49, the discount or interest charge is an exempt supply by the factor, while the administration or service charge, which covers sales ledger management, credit advice, debt collection and management information, is standard rated. HMRC’s internal guidance puts it the same way: factoring is treated as a form of debt collection and is taxable, but the discount element is consideration for the exempt supply of credit.

So both of the things you will read elsewhere are wrong. Factoring fees are not simply VAT exempt, and you cannot add 20% to the whole cost either.

Apply it to the worked examples and the practical effect is clear. Quote C splits cleanly: VAT is chargeable on the £500 service charge and not on the £499.32 discount charge. Quote A is a single undifferentiated 2.5% and cannot be split at all until the provider tells you how the fee is composed, which on a £1,250 fee is a £250 question. Ask for the breakdown at quote stage. If you are VAT registered and fully taxable you will recover the VAT anyway, so this matters most to businesses that are partly exempt or not registered.

Extra Fees to Check Before You Sign

The headline rate is rarely the whole bill, and minimum charges catch people out on small or fast-paying invoices in particular. Triver is the only provider we found publishing its floor, and we rate that as more useful than another headline rate: a minimum upfront charge equal to 10 days of fees, and never less than £18. On an invoice your customer settles in four days, that minimum is your real rate.

• Minimum charge, and whether it bites when a customer pays quickly.
• Application, setup or facility fees.
• Invoice verification and credit-check charges.
• Transfer or same-day payment fees on the advance itself.
• Late-payment or extension fees once the invoice passes its due date.
• Collection charges if the funder has to chase.
• Bad-debt protection, where it is offered as an add-on.
• Early exit or termination fees, if the “one-off” deal turns out to sit inside a facility agreement.

Our invoice finance fees comparison covers the same fee anatomy across ongoing facilities.

Who Is Eligible for Spot Factoring?

Three separate things have to qualify, and businesses usually only think about the first one. Your business has to be acceptable, your customer has to be creditworthy, and the specific invoice has to be clean. A failure at any of the three stops the funding, and the second is the one that catches people out.

Your Business

We found no business-level threshold consistent enough to quote as a market rule, so treat any single figure you read as one funder’s policy. The recurring tests are that you trade business-to-business, that you can be identified and credit-checked, and that you have been trading long enough to have a record. Kriya states it reserves the right to work with businesses trading for at least 12 months that have filed at least one set of accounts. Penny accepts limited companies, partnerships and sole traders that are HMRC registered and based in England, Scotland or Wales.

Turnover matters less here than it does for a whole-ledger facility, which is part of the appeal. The British Business Bank suggests that for businesses turning over less than £300,000 a year, selective or spot invoice finance may suit better than an ongoing facility, precisely because the fixed costs of a full facility are hard to justify at that size.

Your Customer

We rate debtor quality as the single biggest determinant of whether a spot deal completes. The funder is buying your customer’s debt, so it underwrites your customer’s ability to pay far more closely than a conventional unsecured lender would look at anyone but you. A large, slow, financially solid debtor is close to ideal. A small debtor with a thin credit file is a problem however well your own business is trading.

Debtor concentration cuts both ways here too. If one customer is 60% of your turnover, the funder is taking a concentrated risk on that one company, and it may price for that or decline it, even though that same concentration is exactly why you need the funding.

Your Invoice

The invoice itself has to be an uncomplicated, collectable debt. Funders are looking for goods or services actually delivered, evidence that delivery happened, an amount nobody is arguing about, a clearly identifiable debtor, conventional payment terms, no part-payment already received, and no counterclaim sitting behind it.

We separate these two tests deliberately, because who the invoice is addressed to is a different hurdle from who you are, and the two get conflated constantly. Triver funds commercial invoices in sterling issued to UK limited companies, limited liability partnerships, public sector bodies or non-UK large corporates, and states that invoices to consumers or sole traders are not eligible. Penny will take a sole trader as a client. The first is about your customer, the second is about you, and a business can pass one test while failing the other.

Disputed, Retained and Uncompleted Invoices

Some perfectly legitimate invoices are hard to finance because the money is not yet unconditionally owed. Anything under dispute, contractual retentions held back until a defects period ends, stage payments on work still in progress, applications for payment in construction, and any contract carrying set-off rights all need specialist underwriting rather than a standard spot deal.

None of this means the invoice is bad, and we push back on any funder who implies it does. It means the funder cannot be confident of collecting the full amount on the due date, which is the only thing it is buying. Construction in particular has its own funding market for exactly this reason, and our construction invoice finance guide covers how applications and retentions are handled.

Startups and Sole Traders

Sometimes, and it depends on which side of the invoice you are standing. As a client, a sole trader can be accepted, and Penny publishes that it takes them. As a debtor, a sole trader is much harder to fund, and Triver excludes them outright.

For genuine startups the obstacle is usually the trading-history test rather than any rule about the product. Kriya’s 12-month, one-set-of-accounts position is typical of the market. A business three months old with a strong corporate customer is worth approaching a funder about anyway, because the debtor quality is doing most of the work in the decision, but do not plan around it.

A quick eligibility check, in the order funders apply it:

Will Your Customer Know You Are Using Spot Factoring?

Often, but not always, and the product name will not tell you which. We rate this as the single most consequential thing to establish before you sign, because it cannot be undone once a notice of assignment has gone out.

The reason the label fails you here is that disclosure follows the legal structure, not the marketing. A genuine factoring arrangement involves assigning the debt and handing over collection, which more or less requires telling the debtor where to pay. A receivables purchase settled by direct debit from your own account does not.

Disclosed Spot Factoring

Your customer receives a notice of assignment telling them the invoice now belongs to the funder and that payment should go to the funder instead of you. The funder may contact them to verify the invoice before releasing any money, and will chase them if the payment runs late. Penny describes this plainly for its factoring product: customers pay Penny directly, and Penny manages credit control and collects on your behalf.

Whether that matters depends on your market. Some sectors have used invoice finance for decades and nobody blinks. In others, a finance company writing to your biggest client is read as a distress signal, however unfair that is.

Confidential Selective Invoice Finance

Confidential arrangements leave the customer relationship untouched, and we found two of the five products in our table work this way. You keep issuing the invoices, you keep chasing them, your customer keeps paying you, and the funder recovers its advance from you rather than from them. Triver states it does not contact your customers, and settles automatically by direct debit when they pay. Penny’s Confidential Invoice Discounting works the same way, with the sales ledger staying under your control.

These are better described as selective invoice discounting than as factoring, whatever the page they sit on is called. The trade is that you keep the relationship and keep the work: nobody else is chasing that payment for you.

Who Controls Credit Control

Disclosure and collection are two questions, not one, and a funder can notify your customer without taking over the chasing. Establish all four of these for any provider you shortlist, because between them they describe what your customer actually experiences.

Compiled from each provider’s own website, checked 21 August 2026. “Not publicly stated” means the provider does not publish the answer, not that the answer is no. Our guide to factoring credit control covers what outsourced chasing involves.

Spot Factoring Providers and Selective Alternatives

We have not ranked these, because the products are not the same product. Classifying them correctly is more useful than ordering them: two of the five entries below are not factoring at all, and a business that shortlisted them as factoring would be buying the opposite of what it expected on the disclosure question. The tables are split the way a shortlist actually narrows, so read the first for what each product is and the second for what it costs.

Pricing is where the shortlist actually narrows, because only one of the five publishes a rate you can do arithmetic with.

Every field comes from the provider’s own website on 21 August 2026. “Not publicly stated” means the provider does not publish it. Eligibility, pricing and limits change without notice, and a quote is the only figure that binds anyone. We hold fuller assessments of two of these in our Kriya review and Novuna Business Cash Flow review.

Where a provider’s own materials disagree. Novuna’s spot factoring page carries “Get up to 100% of invoice value” and “Get up to 90% of the invoice value within 24-72 hours” on the same page, alongside a description of the provider advancing up to 90%. We have not picked the more attractive number. Current published materials conflict, so treat the advance rate as unconfirmed and get it in the quote.

Fund Your Invoice appears on most lists of UK spot factoring providers and is absent from ours. We could not retrieve any published product terms from its website on 21 August 2026, and we will not fill a row with figures taken from comparison sites.

Four of the five publish no advance rate, no minimum charge and no recourse position, which means a shortlist built from their websites is mostly blanks. If you would rather not fill in four application forms to find that out, a panel broker will do it once. Tide Funding Options is a broker rather than a funder: one application, several lenders assessed, and no impact on your credit score. It is an affiliate link, and it is the only one in this section.

For facilities rather than one-off deals, our best invoice finance companies comparison covers the wider provider market including whole-ledger factoring and discounting.

What Happens if Your Customer Does Not Pay?

We split this into three because three different things can go wrong and they have three different consequences. Lumping them together as “bad debt” is how businesses end up assuming they are covered when they are not.

Your Customer Pays Late

The funding stays outstanding, and on a time-priced deal the meter keeps running. As the worked examples above show, 30 days of lateness turned a £1,215 fee into £2,025 on a daily-rate quote. Some agreements also add an extension fee once the invoice passes its due date, and some hand the chasing to a collections team whose tone is not yours.

This is the most likely of the three outcomes by a wide margin, and it is the one worth pricing before you sign rather than the dramatic one.

The Invoice Is Disputed

A dispute usually makes the invoice ineligible under the agreement, which can trigger immediate repayment of the advance regardless of who is right about the underlying argument. The funder is not going to adjudicate a quality complaint about your work; it will simply hand the debt back.

That is worth thinking about before you fund an invoice to a customer who has queried anything on it. The money can leave your account at the exact moment the argument starts.

Your Customer Becomes Insolvent

This is where the recourse structure stops being paperwork and starts deciding who absorbs a five-figure loss. The invoice itself becomes a claim in your customer’s insolvency, which in practice recovers little and slowly, so the real question is who is left holding it.

Under a recourse agreement, that is you. The funder’s right to reclaim the advance crystallises, the money comes back out of your account, and you join the queue of unsecured creditors for a debt you thought you had sold. Under genuine bad-debt protection the funder absorbs it, subject to every condition set out below.

Recourse and Non-Recourse

Under a recourse arrangement, which is the normal shape for spot deals, you carry the ultimate risk. If your customer never pays, you repay the advance, subject to whatever the agreement says. The funder has bought the debt in form but not the risk in substance.

Non-recourse and bad-debt protection cover some of that risk. We rate “non-recourse” as the most over-sold word in invoice finance, because it does a great deal of misleading work for the funder and almost none for you. It does not mean you never repay if your customer fails to pay. Cover typically depends on why the payment failed, whether the debtor was inside an approved credit limit, whether the failure was genuine insolvency rather than a refusal to pay, whether you complied with the policy conditions, and whether any dispute exists over the invoice.

A customer who simply refuses to pay because they are unhappy with the work is usually outside the cover entirely, which is the gap that catches people. The protection is built for insolvency, not for arguments.

Read the exclusions rather than the product name, and treat any protection as conditional until you have seen what voids it. Our recourse and non-recourse guide sets out the full mechanics.

Advantages and Disadvantages of Spot Factoring

What it does well. You choose which invoice gets financed, so you are not paying to fund receivables that were never a problem. There is no ledger to assign and, in the true one-off version, nothing to exit. The funding attaches to money you are genuinely owed rather than to a forecast, which is why it is available to businesses a term lender would decline. And when a single large or slow-paying customer is the entire cash-flow problem, it targets exactly that.

What it costs you. The price per financed invoice is high compared with an ongoing facility, and that gap widens the more you use it. Your customer may be told, and in a genuine factoring deal a stranger takes over chasing your client. Both the invoice and the debtor have to clear underwriting, so the funding is not reliably available when you need it. Late payment can increase the bill materially on time-priced deals. And recourse means the risk you thought you had sold is still yours.

We rate spot factoring as a good answer to an occasional, specific problem and a poor answer to a permanent one. It is priced as an emergency service, and using it as infrastructure is how a cash-flow fix turns into a margin problem.

When Spot Factoring Makes Financial Sense

One large invoice, out of character with the rest. Most of your customers pay on 30 days, and then a major client puts a £60,000 order on 90-day terms. Financing that one invoice is cheaper and faster than restructuring your funding around a situation that will not repeat.

Seasonal need. A business that only needs funding in two months of the year is a bad candidate for a facility charged across twelve. Paying a premium twice beats paying a service charge every month for capacity you do not use.

Funding a contract you have already won. The invoice is raised, the money is 60 days away, and the next job needs stock, materials or a payroll run now. This is the case where the cost of the finance is easiest to justify, because the alternative is turning down work.

One slow payer distorting everything. Where a single customer’s payment behaviour is the whole problem, financing their invoices selectively fixes it without putting your well-behaved customers into a facility.

When a whole-ledger facility is simply cheaper. This is the calculation we see skipped most often. If you are funding several invoices a month, do the annual arithmetic before you renew the habit. Twelve invoices a year at the £1,250 fee from Quote A is £15,000 against £600,000 of invoices financed. Set that total against a quoted service charge and discount charge on an ongoing facility covering your whole ledger, and include the credit control you would stop doing yourself. Pay-as-you-go stops being the cheaper option long before most businesses notice, because each individual fee still looks small.

Spot Factoring Alternatives

Selective invoice discounting keeps the invoice-by-invoice flexibility but leaves you in control of the customer relationship and the chasing. It is the right comparison if disclosure is your main objection to factoring. See our selective invoice finance guide.

Whole-ledger factoring is the better economics once funding and outsourced credit control are both needed regularly, covered in our invoice factoring guide.

Invoice discounting suits recurring funding needs where you want to keep credit control in-house, explained in our invoice discounting guide. The factoring versus discounting comparison settles which side you are on.

A business line of credit or revolving facility makes more sense when the funding need is not tied to any particular receivable and you want to draw and repay as you go.

A working capital loan fits where you need a defined lump sum and would rather keep customer invoices out of the arrangement altogether. Our working capital finance guide compares the routes.

Is Spot Factoring Regulated in the UK?

“Commercial invoice finance is not regulated by the Financial Conduct Authority” is the line you will read everywhere, and it is too blunt to be useful. We went back to the FCA’s own registration guidance rather than to the market’s summary of it, and found four separate things going on. Only the first is what that sentence describes.

The product’s regulatory perimeter. Invoice finance provided to a limited company for business purposes generally sits outside the regulated consumer credit regime. That is what the shorthand means, and it has a real consequence: you will not normally have Financial Ombudsman Service access or consumer credit protections on a commercial facility.

The provider’s own status. That says nothing about the firm. Novuna, for example, publishes that it is a trading style of Mitsubishi HC Capital UK PLC, authorised and regulated by the Financial Conduct Authority. The company is regulated; the commercial invoice finance you buy from it is not a regulated activity. Both statements are true at once, and conflating them is how “they’re FCA regulated” ends up meaning far less than a business assumed.

Broker status. Several of the routes into this market are brokers or comparison services rather than the funder. If you apply through one, establish who is actually lending, who holds your data, and how the broker is paid.

Anti-money-laundering registration. Factoring businesses generally must register with the FCA as Annex I financial institutions, a requirement that expressly covers factoring with or without recourse and the financing of commercial transactions. Around 1,200 firms are registered on that basis. Registration is not authorisation: the FCA supervises these firms for money-laundering compliance and they are not subject to the wider rulebook. Seeing a firm on that register therefore tells you it is supervised for money laundering, not that its product is regulated or that you have a complaints route.

Industry standards. UK Finance maintains an Invoice Finance and Asset-Based Lending Standards Framework, made up of a code, an independent Professional Standards Council, and an independent complaints process run by CEDR Services Limited, a specialist dispute-resolution body. It is free to complain and the member firm pays CEDR’s costs. The catch is membership: the framework binds UK Finance members and nobody else, so check whether your provider is one before you rely on it. For many businesses this is the only external complaints route available, which makes it worth asking about at quote stage rather than at dispute stage.

Can Your Customer’s Contract Stop You Assigning the Invoice?

Some business contracts contain clauses preventing invoices from being assigned to a finance provider, which historically blocked exactly the businesses that most needed the funding. The Business Contract Terms (Assignment of Receivables) Regulations 2018 made many of those terms ineffective. They came into force on 24 November 2018 and apply to contracts entered into on or after 31 December 2018.

We read the exceptions as mattering as much as the rule here. The regulations do not help where the supplier is a large enterprise or a special purpose vehicle, and they exclude financial services contracts, operating leases, derivatives, and contracts in areas including certain commodities, project finance, energy, land, share purchase and business purchase. Retentions, set-off rights and sector-specific arrangements can complicate things further.

So a no-assignment clause in your customer’s contract is not automatically the end of it, but it is not automatically void either. If your contracts are unusual, or you work in one of the excluded areas, confirm assignability with the funder and take legal advice on the specific wording rather than assuming either outcome.

Why This Product Exists

We include these figures because late payment is the reason the market has a single-invoice product at all. Research commissioned by the Department for Business and Trade and the Small Business Commissioner puts the amount UK businesses are owed in late payments at around £26 billion at any one time, averaging roughly £17,000 for each business affected, with about 28% of businesses affected each year. The wider estimate is that late payment costs the economy close to £11 billion a year and contributes to around 14,000 business closures, which is 38 a day.

Large-business payment performance is improving slowly. The proportion of invoices paid late by large businesses was 15% by number in 2025, down from 25% in 2018. That is progress, and it is no comfort at all if the invoice you are waiting on is one of the 15%.

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