Confidential Factoring


Confidential factoring is a facility associated with the invoice finance industry. Like all invoice finance facilities, confidential factoring allows you to release cash from outstanding invoices.

    What is Confidential Factoring?

    Confidential factoring is a facility associated with the invoice finance industry. Like all invoice finance facilities, confidential factoring allows you to release cash from outstanding invoices. However, this facility includes credit control and when the lender speaks to the debtor, it is as if the credit controller represents your business. This can save a business time and money as you no longer need to chase your clients for payment.


    Companies in the UK
    using Invoice Finance


    Billion invoices
    funded in the UK


    Coffees consumed at
    Contact Business Finance

    How does a Confidential Factoring work?

    Confidential factoring, although not our preferred type of invoice finance facility, is a straightforward facility that allows you to release up to 90% of the gross invoice value, the same day you raise the invoice. Like standard invoice factoring, it can work wonders for businesses that are cash hungry but do not have the time to chase invoices. The process is simple:

    1. You send your invoices to your clients as normal and then to the invoice finance lender

    2. They release up to 90% of the gross invoice value straight away

    3. The invoice finance lender then conducts credit control as if they are calling from your business.

    4. The remaining 10% is made payable to your business once your client pays, minus the lenders charges which are typically 1-3%


    Invoice Value £1,000 £5,000 £10,000
    Cash from the lender on day one (90%) £900 £4,500 £9,000
    Cash from the lender once client pays (10% minus fees) £80 £400 £800
    Lenders fee (based on 2%) £20 £100 £200

    How much does confidential factoring cost?

    There are over 60 different invoice factoring companies in the market who all charge different rates. However, not all of them offer confidential factoring. Your business will generally get a better rate the larger the turnover, but it also depends on your industry and how much you are looking to borrow. A confidential factoring facility will generally cost anything from 1-3% of the invoice value.

    What are the advantages of confidential factoring?

    Improves your cash flowconfidential factoring allows you to grow your business by getting paid quicker. This allows you to have the working capital to move on to the next job / order sooner.

    Professional – if you have a small team, confidential factoring might give the impression to your debtors when they receive a phone call that you have an extra member of staff that conducts credit control.

    Pay suppliers promptly – any type of factoring facility can often pay for itself as you can often get discounts from suppliers as you can pay them quicker.

    Flexibility – because the invoice finance lender can speak to the debtors directly, they can feel more comfortable that the invoices are genuine. Giving a lender a sense of security can allow them to be flexible in other areas.

    Not a loan – unlike a loan, your company is not under the spotlight. Confidential factoring is based on your client’s credit history and not your own.

    Scalable & secure – as your business grows, so does your funding. You can only borrow against cash that you are already owed by clients.

    Release up to 90% of the invoice value – this is not only for future invoices, but you can also drawdown against your existing sales ledger as long as the invoices are not older than 90 days.

    Speed – you can release cash from an outstanding invoice on the same day. Therefore, you no longer have to wait to get paid which means you can move onto the next job sooner.

    Save time & money – you no longer have the hassle of chasing payments and can concentrate on more important things.

    What are the disadvantages of confidential factoring?

    Trust – your clients might know every single member of your company

    Outgoing number – some lenders withhold the number and some lenders have clever phone systems that can match phone numbers. However, most lenders who offer confidential factoring do not even change the outgoing phone number, therefore it only takes a debtor to call the number back and know it isn’t your business.

    B2B sales only – all invoice factoring companies will only fund invoices that are raised to other businesses.

    Terminology – not all lenders use the same terminology and it can be very confusing if you are new to the industry. We can help you understand this financial jargon.

    Confidentiality – confidential factoring is confidential if performed correctly. Some business owners prefer to keep their funding solutions confidential. This facility does allow the lender to speak to the debtor and verify invoices.

    Is confidential factoring regulated?

    All forms of invoice finance facility are currently not regulated by the Financial Conduct Authority. There are however bodies that oversee fair practise such as UK Finance, previously known as ABFA (The Asset Based Funding Association).

    Can a small business apply for confidential factoring?

    Confidential factoring if often required by clients that require the facility to be confidential, but do not meet the requirements for an invoice discounting facility. For example, they can’t produce management accounts every month or they might be large enough.

    Confidential factoring can be great for small businesses who wish to look more professional as if they have their own internal credit controller.

    What is included in the credit control?

    Credit control can be tailored to your business needs. With a confidential factoring facility, credit control is conducted by the lender as if they represent your business. It is quite often that lender will chase your 10 customers. However, if you require more assistance with credit control, speak to us today and we will put your business in contact with the most suitable lenders.

    Can I offer clients credit terms with Confidential Factoring?

    Any form of invoice finance allows you to offer extended credit terms to debtors. It is not uncommon for invoice finance lenders to fund against invoices for 120 days and sometimes more depending on what industry you operate in. Please note, this does not mean that you should offer credit terms to anyone. Invoice finance lenders can help you do searches on clients, so you know if they are creditworthy. .

    What is the process of a confidential factoring facility?

    You send your invoices to an invoice factoring company

    They release up to 90% of the gross invoice value (inc the VAT)

    The invoice factoring conducts credit control on a confidential basis and calls the client as if they are representing your business.

    The remaining 10% is payable back to your business once your clients pay (minus the lenders charges).

    What type of business use Confidential Factoring?

    Any business that raises an invoice to another business on credit terms can apply for an invoice confidential factoring facility. Confidential factoring is often used by a business that wants to give the impression that they have a credit controller internally. If your business needs that little bit more flexibility from an invoice finance lender, having a confidential factoring facility could help as you are allowing the lender to speak to clients direct and confirm the validity of the invoices. Allowing the lender to feel more comfortable can often allow them to be more flexible.

    Is Confidential Factoring a good idea for my business?

    If you are a business that is constantly waiting to get paid and you think that you could take the company to the next level without this cash flow burden. However, you haven’t got the time to speak to debtors and want to keep it confidential. Then a confidential factoring facility could be a great funding solution for you. At Contact Business Finance we will always be honest with you and weigh up your options at no cost.