How much does invoice finance cost?

There is no single headline rate, and anyone who quotes you one without knowing your business is guessing. That said, the cost almost always breaks into two parts:

• A service fee. A charge for running the facility, often expressed as a percentage of the invoices you put through. It covers the administration, and with factoring, the credit control the funder does on your behalf.
• A discount margin. Effectively the interest on the cash you draw, charged only on the funds you actually use, for the time you use them.

What moves the price up or down:

• Your turnover and volume. Larger, steadier ledgers tend to price more keenly.
• Who your customers are. Strong, creditworthy customers who pay reliably reduce the funder’s risk.
• Your sector. Some sectors are straightforward to fund; others, such as construction with its retentions and applications for payment, need a lender who understands them.
• The product and how you use it. A whole-ledger facility, a confidential one, or funding single invoices selectively all price differently.

There can also be arrangement or minimum-usage fees, so the useful comparison is the total cost of a facility, not one line in isolation. That is the main reason to go through a broker: we put your profile in front of several lenders and compare the whole cost, rather than leaving you to judge one quote on its own.