How Bibby Factoring Works: Advances, Fees, and Exit Terms

Bibby Financial Services (BFS) turns your unpaid customer invoices into cash, typically releasing up to 90% of an invoice’s value within 24 hours of submission.¹ That is the whole idea behind how Bibby factoring works: instead of waiting 30, 60, or 90 days for a customer to pay, you sell the receivable to BFS at a discount and get the money now. The rest of the invoice, minus BFS’s fees, comes back to you once your customer settles up.

The mechanics vary a little depending on which product you sign up for, how your contract allocates risk, and what you do when an invoice goes sideways. Here is how each piece fits together.

Which Bibby Product You Are Actually Using

BFS runs two core invoice finance products, and the day-to-day process looks different under each.

Under standard factoring, BFS takes over your credit control. Your customers are told to pay BFS directly, and BFS chases outstanding balances on your behalf.² You hand over the collections work; your customers know a third party is involved.

Under confidential invoice discounting, you keep the sales ledger and continue collecting payments yourself. The arrangement stays between you and BFS, so customers typically do not know their invoices have been funded. BFS advances between 80% and 95% of the invoice value and expects you to have the internal accounting capacity to run collections properly.²

Two add-ons sit alongside both products. Export finance mirrors domestic factoring for overseas sales, letting you draw against invoices before the buyer takes delivery (subject to trade terms) and adding foreign exchange services for international billing.³ Bad debt protection is a standalone add-on that shields your business from the impact of customer non-payment.⁴ How it actually works for you depends on whether your facility is recourse or non-recourse, which is covered further down.

What BFS Needs Before You Can Draw

BFS underwrites both your business and your customers before approving a facility. You will need to supply:

Your registered company number, business name, and address.
Business bank statements, management accounts (profit and loss plus balance sheet), and your most recent year-end financials.
Personal information, proof of identity, and proof of address for every owner.
A clear statement of how much funding you need and what you will use it for.
An accounts receivable aging report, so BFS can see how long your customers take to pay and whether any invoices are already overdue.

Because BFS’s security depends on your customers paying, BFS also runs credit checks on your major account debtors. A weak credit profile on a key customer can result in that debtor being excluded from the facility, or the whole application being declined.

BFS will look hard at concentration too. If one customer makes up a large share of your receivables, BFS may cap how much it will advance against that debtor. In the factoring industry, concentration limits commonly sit around 20% of total receivables, though the exact threshold varies by business. Anything over the limit may not count toward your borrowing capacity.

Expect BFS to want personal guarantees from business owners. A personal guarantee means that if the business cannot repay what it owes BFS and the business assets have been exhausted, you are personally on the hook for the balance. It persists for the life of the agreement. Do not sign one without understanding what you are putting at risk.

The Day-to-Day Cycle

Once the facility is live, the daily rhythm is simple.

Submit the Invoice

You upload invoices through BFS’s secure online portal.³ Each invoice has to represent a completed, undisputed sale.

BFS Verifies

BFS confirms the invoice is real. Under standard factoring, verification is routine because your customer already knows BFS is involved, so BFS may contact them directly to confirm delivery and payment terms. Under invoice discounting, verification uses less visible methods to preserve confidentiality. If an invoice cannot be verified, or your customer flags a dispute, it does not get funded.

You Get the Advance

Once verified, BFS pays up to 90% of the invoice value into your bank account, typically within 24 hours.¹ The remaining percentage is held back as a reserve. The reserve is a buffer against returns, chargebacks, or disputes that could surface before your customer pays. You cannot touch it during the collection period.

Collection

Under standard factoring, BFS manages all contact with your customer and chases overdue balances. Under invoice discounting, you collect from the customer yourself and remit payment to BFS when it arrives.

Reserve Release

Once the full invoice amount is collected, BFS reconciles the account, deducts its fees and any administrative charges from the reserve, and releases the balance to you.³ That release is the final step in turning the receivable into cash.

Who Takes the Loss If a Customer Doesn’t Pay

This is the single most important term in your agreement, because it determines what happens the day a customer stops answering the phone.

Under recourse factoring, if a customer fails to pay within the funding period, BFS reassigns the debt back to you. BFS defines the funding period as 90 days from invoice date to 90 days end of month.⁵ After that, the invoice is yours again. You absorb the loss and must repay any advance BFS made against it.

Under non-recourse factoring, BFS takes the hit when a customer defaults, but only under conditions written into the contract. BFS’s non-recourse terms define two kinds of “protected events”: insolvency events, such as a customer going into liquidation or administration, and non-payment events, where a customer simply does not pay within a defined protection period.⁶ BFS sets a credit limit for each customer, and any debt above that limit becomes “disapproved” and falls outside the protection. Non-recourse costs more because BFS is taking more risk, and BFS chooses which debts qualify.

When an invoice gets disputed after BFS has already advanced funds (damaged goods, late delivery, a quality disagreement), BFS typically gives you time to resolve the issue. If the dispute settles and the customer pays, the process continues normally. If it does not, the amount gets charged back to you, either deducted from future advances or billed for direct repayment. Under a recourse agreement, you are contractually required to buy the invoice back.

With prolonged non-payment under a non-recourse agreement, BFS absorbs the loss through the bad debt protection mechanism if the debt was protected. BFS sets the credit limits, decides which debts qualify, and judges whether further collection work is warranted.⁶ The protection is real, but it is not a blank guarantee on every receivable.

What It Costs

BFS charges a discount rate on each invoice, calculated on how many days the invoice sits outstanding after BFS funds it. The longer your customer takes to pay, the more the fee accumulates. Rates depend on your monthly volume, the creditworthiness of your customers, and your industry’s risk profile. For context, BFS’s FastTrack product for smaller businesses charges a flat 3.5% over a 90-day funding period, which gives a rough sense of the pricing floor for simpler arrangements.

Beyond the discount rate, the agreement typically adds:

A one-time setup fee covering due diligence and legal documentation.
Ongoing service or administration fees, either a flat monthly charge or a percentage of turnover.
Transfer fees per transaction when funds are wired to your account.
Technology fees for access to the online portal.

The total cost matters more than any single line. A low discount rate paired with heavy admin fees can end up more expensive than a higher headline rate with fewer extras. Before signing, add every fee together, annualize it against the funding you expect to actually use, and compare that figure against an overdraft, a revolving credit line, or a competing factor’s offer.

Getting Out of the Contract

Signing up with BFS is easier than leaving, and this catches businesses off guard more than almost anything else in the process.

BFS offers contract terms of 12 or 24 months, or a flexible 30-day rolling option.¹ BFS’s standard terms require written notice of at least the “Minimum Notice Period” to terminate, and that notice can only be given once the initial minimum contract period has expired. The notice must expire on the last day of a calendar month.⁷ If you signed a 12-month deal, you cannot give notice until those 12 months have run, and you still have to wait through the notice period after that. The 30-day rolling contract avoids the lock-in but costs more day to day.

Early termination fees in the factoring industry can be substantial. Some factors average fees earned over the last 90 days and multiply by the months remaining on the contract. Others calculate a percentage of the total approved facility, regardless of how much you actually drew. Either structure can result in a five-figure exit bill. Understand exactly what early termination will cost before you sign, and negotiate the clause if you can.

BFS also reserves the right to terminate the agreement at any time following a “Termination Event,” which can include breaches of the agreement, material changes in your financial condition, or other triggers defined in the contract.⁷ When BFS pulls the plug, all outstanding advances become immediately repayable. If daily cash flow depends on the facility, you need a backup plan. Factoring works best as part of a working capital strategy, not as the only thing holding one together.

1
Bibby Financial Services. An Overview of Our Finance Solutions
2
Bibby Financial Services. Invoice Discounting vs Factoring
3
Bibby Financial Services. Export Financing for Businesses
4
Bibby Financial Services. Bibby Financial Services Home
5
Bibby Financial Services. Finance and Funding Glossary of Terms
6
Bibby Financial Services. Non-Recourse General Conditions
7
Bibby Financial Services. Standard Conditions for the Purchase of Debts