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Invoice factoring releases most of the cash tied up in an unpaid invoice, often within 24 hours, rather than making you wait 30, 60 or 90 days for a client to pay.
Why scaffolding businesses use invoice factoring
Scaffolding work is often paid on terms set by someone else: a main contractor, a developer, a payment schedule buried in a contract. Materials, labour and vehicle costs don’t wait for those terms, though. Across the UK construction sector, invoices take a median of around 33 days to be paid, and payments from main contractors on larger jobs can run considerably longer. Invoice factoring releases most of the cash tied up in an unpaid invoice as soon as it’s raised, rather than leaving you waiting weeks or months for a client to pay.
It’s one of the most underused forms of finance in this industry relative to how well it fits. Construction cash flow problems are almost always a timing issue, not a profitability one, and factoring solves specifically for timing.
How invoice factoring works
Raise your invoice as normal
Invoice your client the way you always do for work already completed.
Submit it to your factoring provider
A copy of the invoice is sent to the lender.
Receive an advance
Typically up to 90% of the invoice value is released to you, often within 24 hours.
Get the balance once your client pays
The remaining amount, minus fees, is paid to you once the invoice is settled. The provider can also manage credit control and collect payment on your behalf.
Invoice factoring vs invoice discounting
Factoring and invoice discounting both release cash against unpaid invoices, but they work differently. With factoring, the finance provider typically manages credit control and chases payment on your behalf, and your clients are usually aware the invoice has been factored. With invoice discounting, credit control stays with you, and the arrangement is usually confidential. This page covers invoice factoring specifically; if a confidential facility with credit control kept in-house suits your business better, speak to our team about invoice discounting options too.
What you can fund with invoice factoring
- Invoices owed by main contractors or developers
- Ongoing contracts with staged payments
- Multiple invoices across different clients, combined into one facility
- Facilities that scale as your turnover grows
Who can use invoice factoring?
Invoice factoring is generally available to limited companies and partnerships that invoice other businesses for completed work, including scaffolding subcontractors working under CIS. The facility is usually sized around your turnover and the quality of your customer base, rather than a fixed borrowing limit.
- Limited companies and partnerships considered
- Suits businesses invoicing main contractors, developers or other businesses
- Facility size grows with your invoice volume
- CIS subcontractors can be considered
What you’ll need to apply
Because factoring is based on your invoices and customer base, lenders will want a clear picture of who you invoice, not just how much.
- A list of your regular customers and roughly how much you invoice them
- Copies of a few recent invoices
- Your business trading history and annual turnover
- Details of your credit control process, if you have one
- Confirmation of any existing invoice finance facility
Managing a wider mix of finance needs? See our contractor finance overview, or if it’s a tax bill rather than unpaid invoices causing the pressure, see our VAT loan and corporation tax loan pages.
FAQs about invoice factoring
Invoice factoring is a way of releasing cash from unpaid invoices before your client pays them. A factoring provider advances most of the invoice value upfront, often within 24 hours, and pays the remaining balance, minus fees, once your client settles the invoice.
This varies by provider, but advances of up to around 90% of the invoice value are common. The exact figure depends on your business, your customers and the specific facility agreed.
With invoice factoring, the provider typically manages credit control and collects payment from your customers directly, and the arrangement is usually disclosed. With invoice discounting, you keep managing credit control yourself, and the facility is usually confidential. Both release cash against unpaid invoices; the difference is who manages collection and how visible the arrangement is to your clients.
It can, since your client may be aware the invoice has been factored and could be contacted directly by the provider regarding payment. Many providers handle this professionally as a routine part of managing invoices. If you’d prefer a more d
Yes. Invoice factoring is commonly used by scaffolding subcontractors working under CIS who invoice main contractors and experience longer payment terms.
Not quite. Invoice factoring is based on the value of invoices you’ve already raised for completed work, rather than being borrowed as a fixed lump sum with a set repayment term. It’s typically an ongoing facility that grows alongside your turnover.