Guide
Is invoice factoring regulated, and what protects you
Updated
Invoice finance is lending to a business against its receivables, and most of it sits outside the consumer framework people assume covers all financial services. That is worth knowing before you assign your sales ledger to somebody.
Why it is mostly unregulated
Consumer protections in UK financial services broadly attach to individuals rather than to companies borrowing against trade receivables. A factoring agreement between two businesses is therefore normally governed by its own terms and by contract law.
That does not make it unsafe or improper, and many providers are authorised firms for other activities. It means the agreement is the protection, and an agreement you did not have read is not much of one.
What you may not be able to fall back on
The routes a consumer relies on, including the Financial Ombudsman Service and the Financial Services Compensation Scheme, may not be open to a corporate borrower here, and the FCA's Consumer Duty is directed at outcomes for retail customers rather than at every commercial counterparty.
So read the default provisions, the reassignment and recourse terms, and anything permitting the provider to change the advance rate or reserve against your ledger during the term. Those clauses decide what happens on your worst day.
Check the provider first
The FCA's Financial Services Register is free and public. Look up any firm before you send a sales ledger, customer list or bank details, because that package is exactly what a fraudulent counterparty wants.
The FCA's scam guidance describes the pattern to watch: urgency, an upfront fee, and an entity whose name is close to but not the same as the firm you were introduced to.
What assignment actually means
Under a factoring agreement you assign the debts. Your customers owe the provider rather than you, and that is a real transfer rather than an administrative convenience.
Understand what happens to that assignment if you terminate, if a customer disputes an invoice, or if the provider is itself acquired. Ask for those three answers in writing; they are ordinary questions and a good provider answers them without friction.