In today’s economic environment cash flow remains a challenge for SMEs. Recent research reveals that unpaid invoices totalling between £5,000 and £20,000 are owed to over a quarter (27%) of UK small and medium-sized enterprises, and over half (55%) report a rise in late payments during the last six months*.
In 2025 there are more than 45,000 businesses in the UK that use some form of invoice finance, 40% of which use factoring. Once a more niche solution, it has become a common financial tool that helps companies stay flexible and grow. From service-based SMEs to manufacturers and logistics firms, many are embracing factoring to support growth and improve working capital.
Understanding the mechanics of invoice factoring
Invoice factoring allows businesses to unlock funds tied up in unpaid invoices, providing immediate access to cash. Unlike invoice discounting, invoice factoring transfers the responsibility of collecting outstanding funds to the factoring provider.
This service can be especially beneficial for those facing cash flow issues due to slow payment. It also alleviates the burden of money owed, allowing business owners to concentrate on running and expanding their operations.
Why do firms use factoring?
Smaller firms are seeing significant advantages from invoice factoring. Businesses lacking internal credit control and unable to dedicate the required time to chasing late payments, or who wish to divert efforts into other areas of the business, can outsource collections while freeing up funds from unpaid invoices.
Whether it’s a recruitment firm bridging the gap between paying candidates’ wages and receiving payments from their clients, or a supplier dealing with long settlement terms, factoring provides a lifeline that fuels day-to-day operations and long-term expansion.
Invoice factoring for modern businesses
In a world where flexible finance is essential, invoice factoring provides speed, clarity, and support as part of a holistic funding strategy.
Users today are more financially savvy and their perceptions have shifted. They increasingly understand that invoice factoring is a sign of smart cash flow management and a commitment to maintain operational efficiency and invest in the future.
Find the right fit for your business
Unsure if invoice factoring can work for your firm? Our team will work with you to tailor a funding solution that’s right for your goals.
Get in touch and take the next step in strengthening your business’s financial future.
