What is invoice finance?

Invoice finance is a working capital solution that lets limited companies release a portion of the value of their unpaid customer invoices immediately, instead of waiting 30–120+ days for customers to pay. It is commonly used by businesses with B2B invoices, predictable sales and cash tied up in debtor days.

Two main forms are available: invoice factoring (the funder typically handles collections) and invoice discounting (you retain control of credit control). Both free up cashflow quickly, helping meet payroll, buy stock or take on larger projects.

How invoice finance works (step by step)

1. Raise an invoice: You deliver goods or services and issue a B2B invoice to your customer.
2. Send invoice to the funder or broker: The lender/broker verifies the invoice and customer details.
3. Advance funds: You usually receive an advance of 70–90% of the invoice value within 24–72 hours.
4. Customer pays invoice: The customer pays the invoice to the funder or to your business, depending on the facility type.
5. Reconciliation: Once payment clears the funder pays the remaining balance minus fees (the “reserve”).

Want to see likely advance rates for your sector? Get a Free Eligibility Check and we’ll match you with brokers who can give indicative figures.

Invoice factoring vs invoice discounting

Choosing between factoring and discounting depends on how much control you want over collections and whether you want customers to know you use a funder.

Fees and terms vary by provider and sector. To compare factoring and discounting across multiple lenders quickly, Get Quote Now.

Who invoice finance suits (and when it doesn’t)

Invoice finance works best for limited companies that:

• Sell primarily to other businesses (B2B) on credit terms
• Have regular, verifiable invoices with good debtor profiles
• Need working capital from £10,000 upwards
• Want to grow, tender for larger contracts or smooth seasonal cashflow

When it may not fit:

• If a large share of invoices are disputed or to high-risk customers
• If your invoices are primarily to consumers (B2C)
• If you prefer a fixed-term loan rather than a revolving facility

Benefits of invoice finance for UK SMEs

• Immediate cashflow: Release most of the invoice value within days rather than waiting months.
• Flexible facility: Funding grows with your sales — useful for scaling businesses.
• Protect growth: Pay suppliers sooner, win larger contracts or take on new staff without cash strain.
• Bridge seasonal peaks: Smooth income gaps in seasonal industries like hospitality or retail.
• Potential debt consolidation: Use funds to restructure more expensive short-term debt.

See how invoice finance compares with other solutions by speaking to a specialist — Free Eligibility Check.

Costs, fees and risks to factor in

Costs vary by provider, industry and the credit quality of your debtors. Typical charges include:

• Discount rate / interest: Charged on the amount advanced; can be a percentage per annum or monthly equivalent.
• Service fee: Administration, reporting and account handling fees.
• Setup and termination fees: One-off fees may apply.
• Customer default risk: If a customer fails to pay, the funder’s exposure depends on the facility type and whether bad debt protection is included.

Always review terms carefully and compare quotes. Fast Business Loans helps you do that quickly and without obligation — Get Started Free Eligibility Check.

Eligibility checklist & documents you’ll need

Typical requirements from lenders/brokers include:

• Limited company registration details and beneficial owners
• Recent management accounts (often last 3–12 months)
• Aged debtor report or list of outstanding invoices
• Copies of key customer invoices and contracts
• Bank statements (3–6 months)

Most lenders have minimum facility sizes; we generally work with enquiries from £10,000 and upwards. Prepare these documents to speed up any quote process. When you’re ready, Get Quote Now.

Industries we commonly help with invoice finance

We regularly connect businesses in the following sectors to invoice finance specialists:

• Construction & subcontracting — manage staged payments and supply chains.
• Recruitment & staffing — cover payroll while clients settle.
• Manufacturing & wholesale — fund stock and raw materials.
• Logistics & transport — bridge payment cycles for freight and deliveries.
• Professional services (B2B) — smooth cashflow between client billings.

If your sector isn’t listed, you may still be eligible — complete a short enquiry and we’ll match you to suitable specialists: Free Eligibility Check.

Alternatives to invoice finance (and when they fit better)

Invoice finance is one option among many. Depending on your goals, consider:

• Term business loans — for fixed capital projects or purchases with set repayment schedules.
• Asset finance — to fund specific equipment purchases against the asset value.
• Revolving credit facilities / overdrafts — for flexible short-term borrowing from your bank.

Want a tailored recommendation? Our partners can compare invoice finance against other routes and advise which fits your plan. Get Started Free Eligibility Check.

For a full guide to invoice finance terms and comparisons, check our pillar resource on invoice finance.

Why use Fast Business Loans to find invoice finance?

Fast Business Loans is an introducer that helps you save time and improve the chance of a good match. Here’s what we do:

• Quickly assess your needs and match you with brokers and lenders experienced in your sector.
• Provide a no-obligation route to receive multiple quotes without affecting your credit score.
• Make the process simple — you give a few details once and we do the legwork.

We don’t provide loans or financial advice — we introduce you to lenders and brokers who can. If you want impartial matching and rapid responses, Get Quote Now.

How to get started in minutes

1. Click the link and complete our short enquiry form (under 2 minutes): Start Your Free Eligibility Check.
2. We match your enquiry with suitable lenders/brokers who review your details.
3. A specialist will contact you with indicative terms and next steps.
4. Compare offers, ask questions, and choose the provider that fits your business.

Submitting an enquiry is not an application and will not affect your credit score. If you’d like an indicative quote, Get Started Free Eligibility Check now.

Note: Fast Business Loans acts as an introducer; we are not a lender and do not provide regulated financial advice. Enquiries are used to match you with the best lenders/brokers for your circumstances.

Invoice finance FAQs

What is the difference between factoring and discounting?

Factoring usually includes credit control and collections by the funder; discounting keeps collections in-house and is typically confidential to customers. The right choice depends on how much control and customer visibility you want.

How much of my invoice can I access?

Advance rates typically range from 70% to 90% depending on the funder, debtor quality and sector. Reserve and fees are released on customer payment.

Will my customers know I use invoice finance?

With factoring customers are often notified and pay the funder directly. With confidential invoice discounting, customers usually remain unaware.

Does applying affect my credit score?

Submitting an enquiry through Fast Business Loans does not affect your credit score. Lenders may carry out credit checks later if you choose to proceed.

How fast can funds be released?

Simple, pre-approved facilities can release funds within 24–72 hours after invoice verification and due diligence; more complex setups may take longer.