What Is the Difference Between Factoring and Forfaiting?
Factoring covers short-term domestic invoices (30-90 day terms). Forfaiting covers medium-to-long-term export receivables (180 days to 7 years), typically backed by letters of credit or bank guarantees. Forfaiting is used for large capital goods exports. Most UK SMEs use factoring, not forfaiting.
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Oliver Mackman
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 6 April 2026