Your invoice and customer profile
- Average monthly invoiced turnover
- Typical invoice value range
- Customer payment terms (30, 60 or 90 days)
- Number of active customers
- Sector or industry
Invoice Finance
Unlock cash tied up in unpaid invoices. Compare invoice finance from a panel of UK lenders. Free, no obligation.
- Up to 100% of invoice value advanced within 24 hours
- Single invoices, full ledger, factoring or confidential invoice discounting
- Independent commercial finance broker
- Start online, then a specialist guides the lender process
Last updated: July 2026
What is invoice finance?
Invoice finance, sometimes called invoice financing, bridges the gap between issuing a B2B invoice and getting paid. Instead of waiting weeks or months for clients to settle their bills, a lender advances a significant percentage of the invoice value upfront, giving you access to cash tied up in your sales ledger.
As a working-capital tool for UK SMEs, invoice finance grows with your sales ledger. While traditional term loans or revolving credit facilities rely on fixed borrowing limits, your funding line here can expand as your sales increase.
For example, a £50,000 invoice with a 90% advance releases £45,000, often within 24 hours. When your customer pays, you receive the remaining £5,000 less the agreed fees.
How invoice finance works
Five steps from invoice raised to cash released.
- 01
Raise invoices as normal
Invoice your B2B customers on standard 30, 60 or 90 day payment terms.
- 02
Submit invoices to the lender
Choose single invoices, multiple invoices or your whole sales ledger to fund.
- 03
Receive up to 100% advance
The lender advances up to 100% of the invoice value, often within 24 hours.
- 04
Customer pays the invoice
Either you collect, or the lender collects, depending on your facility.
- 05
Receive the balance
Once the invoice settles, you get the remaining balance, less the agreed service and finance fees.
What you'll need
A few details up front let us match you to lenders faster and shape the right facility.
Your business
- Companies House number and trading name
- Date of incorporation and length of trading
- Annual turnover
- Last 6 months of business bank statements
- Most recent year-end accounts, or management accounts if newer
- A recent aged debtor report if available
Sales ledger and product preference
- Whether you currently do your own credit control
- Any bad debt history over the last 12 months
- Whether turnover is concentrated with a single customer
- Whether you prefer factoring (disclosed with credit control), confidential invoice discounting, or selective invoice finance
We do not run a credit search at the enquiry stage. A formal search may happen when you progress to underwriting with a lender.
Types of invoice finance
Different facilities suit different ledgers, customer relationships and credit-control setups.
- Invoice factoring
- The lender advances funds and manages credit control. Your customers know about the facility. Often suits smaller businesses or those without dedicated credit control.
- Invoice discounting (confidential invoice finance)
- The lender advances funds and you keep credit control. The arrangement is confidential, so your customers do not know. Often suits established businesses with strong sales ledger management. Sometimes called confidential invoice finance because the facility is hidden from your customers.
- Selective invoice finance
- Choose specific invoices to fund rather than the whole ledger. It gives pay-as-you-go flexibility without a long-term contract.
- Spot factoring or single invoice finance
- Fund one invoice for a one-off cash-flow need, without committing your whole sales ledger to an ongoing facility.
Invoice factoring vs invoice discounting
The main difference is who manages credit control and whether your customers know about the invoice finance facility.
| Feature | Factoring |
|---|---|
| Who manages credit control | The lender |
| Disclosed to your customers | Yes |
| Typical advance rate | 80% to 90% |
| Service fee (% of annual turnover) | 0.5% to 3% |
| Discount charge (interest, above BoE base) | 1.75% to 3.5% |
| Typical minimum annual turnover | £100,000+ |
| Typical minimum contract | 3 to 12 months |
| Best suited to | Smaller businesses without in-house credit control |
| Feature | Discounting |
|---|---|
| Who manages credit control | You |
| Disclosed to your customers | No (confidential) |
| Typical advance rate | 80% to 100% |
| Service fee (% of annual turnover) | 0.1% to 0.5% |
| Discount charge (interest, above BoE base) | 1.75% to 3.5% |
| Typical minimum annual turnover | £250,000+ |
| Typical minimum contract | 6 to 12 months |
| Best suited to | Established businesses with strong sales ledger management |
| Feature | Selective invoice finance |
|---|---|
| Who manages credit control | You (or the lender, depending on facility) |
| Disclosed to your customers | Usually no (confidential) |
| Typical advance rate | 80% to 90% |
| Service fee (% of annual turnover) | 0.5% to 3% (often per invoice) |
| Discount charge (interest, above BoE base) | 1.75% to 3.5% |
| Typical minimum annual turnover | Flexible, often no minimum |
| Typical minimum contract | Pay-as-you-go, no minimum term |
| Best suited to | Businesses wanting to fund individual invoices without a long-term commitment |
Indicative ranges. Actual terms depend on your turnover, customer credit quality and lender.
Is invoice finance right for your business?
Invoice finance is strongest where invoices are business-to-business, high value and paid on standard credit terms.
-
You sell to other businesses
B2B trading on credit terms. B2C sales generally do not qualify.
-
You have a trading history
Suitable for both start-ups and established businesses.
-
Your invoice values are typically over £5,000
Most facilities have a minimum invoice threshold. Selective and spot products are more flexible.
-
Your customers pay within 30 to 120 days
Standard B2B credit terms. Anything significantly longer may be harder to fund.
-
You work in a sector with long payment terms
Invoice finance can suit SMEs such as recruitment agencies, construction subcontractors, manufacturers, wholesalers and logistics firms where approved B2B invoices are waiting to be paid.
-
Your annual turnover is over £100,000
A common minimum for established facilities. Selective and spot finance can work below this.
Pros and cons of invoice finance
Pros
- Improves cash flow without a new fixed repayment loan
- Funding scales with sales, with no need to reapply
- Faster decisions than typical bank lending
- Available to businesses without significant fixed assets
- Factoring can outsource credit control
Cons
- Service and discount fees can be higher than secured loans
- Customers may know if you use factoring
- Some facilities have minimum contract terms, typically 6 to 12 months
- Not suitable for B2C businesses
- If a customer does not pay, you may be liable unless you have bad debt protection
How much does invoice finance cost?
Invoice finance rates normally combine two charges.
Service fee
0.1% to 3%
The service fee covers administration, ledger management and facility costs. It is often quoted as a percentage of turnover, commonly around 0.1% to 3%.
Discount charge
1% to 4%
The discount charge works like interest on the money advanced. It is usually charged as a margin above base rate, often around 1% to 4%, depending on facility type, volume and customer credit quality.
Exact pricing depends on your invoice volume, debtor spread, average payment time, customer strength and whether you choose factoring, discounting, selective funding or single invoice finance.
How FundingLinks finds your invoice finance
- 01
Tell us what you need
Share your business details, invoice profile and funding requirement.
- 02
We compare lenders
We compare offers from 100+ UK lenders and specialist invoice finance providers.
- 03
Choose the right offer
Review the options and choose the facility that fits your cash-flow needs.
- 04
Draw funds
Once approved, funds can be in your account, often within 24 to 48 hours.
Why businesses choose FundingLinks
Specialist support for UK SMEs looking to compare invoice finance and working capital options.
- 100+
- UK lenders compared
- 500+
- SMEs funded
- 35+ years
- Combined commercial finance experience
Whole-of-market panel
100+ UK lenders, including high-street banks, challenger banks, specialist lenders and alternative finance providers. We are an independent broker, not tied to any single lender.
Specialist, founder-led support
Founded by Sam Wells and Chris Findlow, with 35+ years' combined experience in commercial finance. You speak to specialists, not a call centre.
Clear process, secure portal
Track your enquiry, review lender offers and exchange documents in one secure portal. No email chains, no spreadsheets, full visibility from enquiry to drawdown.
Free to compare, success-based fees
No upfront charge to use FundingLinks. Fees apply only if you proceed with a facility, and they are agreed in writing before you commit.
Invoice finance FAQs
Direct answers to the questions business owners usually ask before comparing facilities.
What does invoice finance mean?
Invoice finance means using unpaid B2B invoices to release cash before your customer pays. A lender advances part of the invoice value, then the facility is settled when the customer pays.
What is the difference between invoice factoring and invoice discounting?
Factoring means the lender manages your sales ledger and collects payment from customers, so your customers know about the facility. Discounting lets you keep credit control, so the arrangement is confidential. Discounting can advance up to 100% of the invoice value and factoring up to 90%, usually within 24 hours.
What is confidential invoice finance?
Confidential invoice finance is another name for invoice discounting. The lender advances funds against your invoices, but the arrangement stays hidden from your customers. You manage credit control and collect payments as normal, so customers see no change. Some lenders also offer CHOCS (Customer Handles Own Credit Service), where the facility is disclosed to your customers but you retain credit control and collect payments yourself.
How do invoice finance companies and providers differ?
Invoice finance companies vary by facility type, advance rate, fees, minimum turnover, sector appetite and how they handle credit control. A specialist broker can help compare which providers are suited to your invoices before you apply.
How quickly can I get invoice finance?
Indicative decisions are usually possible within a few working days. Setting up a full facility typically takes a few working days, after which you can draw funds against new invoices within 24 hours. Some selective lenders can set up facilities in as little as 24 hours.
Do I have to fund all my invoices?
No. Selective invoice finance and spot factoring let you choose individual invoices to fund. Whole-ledger facilities fund all qualifying invoices, but they can offer better rates for higher volumes.
Will my customers know I am using invoice finance?
With invoice discounting, the arrangement is confidential and your customers do not need to know. With invoice factoring, the lender contacts your customers to collect payment, so the facility is disclosed.
What does invoice finance cost?
Two charges typically apply. A service fee, usually 0.1% to 3% of turnover, covers the lender costs. A discount charge, usually 1% to 4% above base rate, applies to funds you draw. Exact pricing depends on volume, customer credit quality and facility type.
Can a small business or startup get invoice finance?
Yes, in some cases. Eligibility depends partly on your customers creditworthiness, invoice values and payment terms. Selective invoice finance is often more flexible for smaller or newer businesses.
Is invoice finance suited to recruitment agencies?
It can be suited where a recruitment agency invoices business clients on credit terms and needs to cover payroll before customers pay. A specialist can guide which facility fits the agency model and payroll cycle.
Is invoice finance suited to construction businesses?
It can be suited to construction subcontractors with clear B2B invoices and longer payment terms. Retentions, applications for payment and disputes can affect lender fit, so specialist guidance is useful before applying.
Is invoice finance regulated?
Invoice finance itself is not typically subject to the same product-level conduct rules as some retail lending, but many reputable providers are members of UK Finance and follow its Standards Framework.
What happens if my customer does not pay?
It depends on your facility. With recourse facilities, you are liable if a customer does not pay. With non-recourse or bad debt protection, the lender absorbs the loss. Confirm which type you have before signing.
Am I tied into a long contract?
Whole-ledger factoring and discounting typically have minimum terms of 6 to 12 months. Selective invoice finance and spot factoring are usually pay-as-you-go with no minimum commitment.
What is bad debt protection?
Bad debt protection is an optional add-on that protects you against customer non-payment. The lender absorbs the loss instead of clawing back the advance from you. It adds to the cost of the facility but reduces your risk.
Is invoice finance the same as a loan?
No. A loan adds debt with fixed repayments. Invoice finance is an advance against money you are already owed, repaid automatically when your customers pay. It scales with sales rather than sitting as a fixed facility.
What sectors use invoice finance most?
Sectors with long payment terms and high working-capital needs often use invoice finance, including recruitment, manufacturing, wholesale, logistics, construction subcontracting and professional services.
Related products
Other funding options that can work alongside, or instead of, invoice finance.
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Written by
Chris Findlow
Director, FundingLinks
Chris Findlow co-founded FundingLinks after more than 15 years across commercial lending, invoice finance and fintech partnerships, including senior leadership roles at Kriya. He brings deep lender-side experience across sales, partnerships and account management to help SMEs access the right funding.
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