Typical process for a €12,000 VAT-inclusive invoice with 60-day terms:
The cost, broken down honestly:
| Item | Range | On €12,000 at 60 days |
|---|---|---|
| Factoring commission (service, collections) | 0.5-3% of VAT-inclusive amount | €120-360 |
| Financing commission (cash advance) | Euribor + 2-4%/year pro rata | ~€70-110 |
| Guarantee fund (withheld, refunded at contract end) | 5-10% of assigned turnover | €600-1,200 tied up |
Total cost: 1.5-4% of the invoice, depending on your volume, customer quality and negotiating power. Expensive compared to a well-negotiated overdraft? Not necessarily: factoring includes collections and often credit insurance that covers you if the customer goes bankrupt.
Standard exclusions: B2C, progress invoices, unvalidated work situations by the project owner, high-risk customers or excessive concentration (a factor dislikes a single customer accounting for 40% of your assigned turnover).
| Solution | Principle | Indicative cost | For whom |
|---|---|---|---|
| Factoring | Assignment of invoices to the factor + outsourced collection | 1.5–4 %/invoice | High growth, recurring needs, desire to outsource accounts receivable |
| Dailly assignment | Assignment of receivables to your bank, via a form | ~1–2 % + interest | One-off needs, established banking relationship, you retain collection |
| Bank discount | Financing of trade bills (bills of exchange) | Rate + fees | Sectors where bills of exchange still circulate (wholesale, construction) |
| Authorised overdraft | Short-term credit line | 8–15 %/year on used amount | Short and predictable cash flow gaps |
Choosing the right tool: factoring is a structural tool (annual contract, committed volume), while Dailly and overdrafts are ad-hoc tools. A high-growth SME with exploding working capital requirements benefits from factoring—financing automatically scales with turnover, whereas an overdraft is capped. A stable SME with a temporary cash flow peak in July might use Dailly for its three largest invoices and stop there.
Reverse factoring deserves a mention: it’s when a major customer sets up a programme to pay its suppliers upfront via a factor, at a rate tied to its own credit rating. If a key client offers this, it’s usually a good deal—you get paid in 10 days at a lower cost than your own factoring.
Discover the Orizen answer: Orizen invoicing — payment tracking, modular and built for French SMEs.
Essai gratuit 14 jours What the Orizen invoicing — payment tracking module costsWith notified factoring (the standard): yes—the invoice includes a subrogation notice and the customer pays the factor directly. Some managers worry about the signal this sends; in practice, factoring is widespread in B2B (over 400,000 French businesses use it). If image remains a concern, confidential factoring is an option: the customer pays into a dedicated account without knowing—but it’s reserved for solid companies (turnover > €1–2M, clean accounts) and costs slightly more.
Yes, and it’s one of its strengths: the factor lends based on the quality of YOUR CUSTOMERS, not yours. A 6-month-old company invoicing reliable corporate clients can secure a contract where its bank would refuse any overdraft. Factoring fintechs (per-invoice financing, no volume commitment) are especially suited to startups: more expensive per invoice (2–5 %), but with no annual contract or minimum.
It depends on the contract. With "recourse factoring", the factor recharges the unpaid invoice after a delay (often 60–90 days post-due date)—you retain the risk. With "non-recourse" (backed by credit insurance), the factor absorbs the loss within the guaranteed limit per customer. Non-recourse costs 0.2–0.5 % more and is almost always worth it: it turns factoring into genuine protection against customer default, not just a cash advance.