What Is Invoice Finance?

Invoice finance is a flexible way to release cash from your outstanding customer invoices. Instead of waiting 30–120 days to be paid, you can receive a large portion of the invoice value upfront from a finance provider, then the remaining balance (minus fees) when your customer pays.

Common types

• Invoice factoring: The provider may manage collections/credit control and customers may be aware of the arrangement.
• Invoice discounting: You keep control of collections. Often confidential, so customers typically won’t know you’re using finance.
• Selective or spot: Finance individual invoices or a chosen batch rather than the whole ledger.
• Whole ledger: Fund most or all eligible invoices for ongoing cash flow support.

Factoring vs Discounting — Key Differences

• Control of collections: Factoring is provider-led; discounting is business-led.
• Confidentiality: Factoring is often disclosed; discounting is often confidential.
• Admin: Factoring can reduce in-house admin; discounting offers more control but more admin your side.
• Typical users: Factoring suits businesses seeking credit control support; discounting suits firms with robust internal processes.

Recourse vs Non-Recourse

• Recourse: If your customer doesn’t pay, you may need to buy back the invoice or have it offset against your balance.
• Non-recourse: Some protection against approved debtor non-payment (subject to terms). Usually costs more and has eligibility criteria.

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When Invoice Finance Makes Sense

If you sell to other businesses on credit terms, invoice finance can bridge the gap between raising an invoice and getting paid. It’s commonly used to:

• Smooth cash flow while waiting for B2B customers to pay
• Purchase stock, materials, or fuel
• Cover payroll, subcontractors, and running costs
• Take on larger orders without straining cash flow
• Invest in growth without waiting for payments to clear

Benefits

• Speed: Access a percentage of invoice value once approved.
• Flexibility: Fund selected invoices or your sales ledger.
• Scalable: Facilities can grow with your turnover.
• Cash flow certainty: Plan with greater confidence.
• Operational support: Factoring can reduce time spent on collections.

Considerations and Risks

• Fees and interest apply; total cost varies by provider and risk profile.
• Recourse arrangements mean you may remain liable for bad debt.
• Contracts may include notice periods, termination fees, or minimum charges.
• Concentration and eligibility limits can affect drawdown amounts.
• Debtor quality and diversification can influence pricing and terms.

We connect you with providers who explain terms clearly so you can make an informed decision.

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How Much Can You Advance Against Invoices?

Advance rates typically range from about 70% to 95% of an approved invoice’s value. The exact percentage depends on:

• Your sector and average debtor days
• Customer (debtor) quality and diversification
• Trading history and financials
• Factoring vs discounting, and recourse vs non-recourse

Illustrative example (for guidance only; not an offer):

• Invoice value: £100,000
• Advance rate: 85% (i.e., £85,000 advanced)
• Retention: 15% minus fees released on customer payment
• Charges: Service fee plus discount rate on funds used

Actual terms will vary. A lender/broker will confirm eligible debtors, advance rates, and pricing after assessment.

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Costs and Fees — What to Expect

• Discount rate: Interest on funds advanced, often a margin above a base rate, calculated on outstanding funds.
• Service fee: Typically a percentage of turnover or invoice value, reflecting administration and facility management.
• Arrangement/setup fee: One-off fee to establish the facility.
• Other charges (where applicable): Payment/transfer fees, audit/review fees, credit protection (for non-recourse), trust account fees, or early termination fees.

We’ll connect you to providers known for transparent pricing so you can compare like-for-like.

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Who Is Eligible?

Invoice finance generally suits UK businesses that:

• Are Limited Companies or LLPs
• Raise invoices to other businesses (B2B) for delivered goods or completed services
• Offer credit terms (e.g., 30–120 days)
• Have verifiable invoicing and delivery evidence (e.g., PODs, signed timesheets)
• Seek facilities from £10,000 and upwards

What helps your application:

• Reliable customers with good payment history
• Clear invoicing and credit control processes
• Stable or growing turnover
• Up-to-date financials and management information

Documents You May Be Asked For

• Basic business details and director information
• Latest filed accounts and recent management accounts
• Aged debtor and creditor reports
• Sample invoices and proof of delivery/completion
• Details of any existing finance facilities

Complete a short enquiry and we’ll match you with suitable UK providers who confirm exactly what’s needed.

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How Fast Business Loans Works

1. Quick enquiry: Tell us about your business and funding needs. It takes under 2 minutes.
2. Smart matching: We connect you with UK brokers and lenders who understand your sector and requirements.
3. Rapid response: Expect a call or email to discuss options and indicative terms.
4. Compare and decide: Review offers and choose what suits you best. No obligation to proceed.

We’re not a lender and we don’t provide financial advice. We’re a free-to-use introducer that helps you reach trusted brokers and lenders quickly and securely.

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Industries We Support With Invoice Finance

We connect companies across many sectors, including:

• Construction and building services: materials, labour, subcontractors
• Logistics and transport: fuel, fleet, drivers
• Manufacturing and engineering: components, tooling, machinery uptime
• Healthcare and care providers: staffing and supplier payments
• Food, printing, and packaging: inventory, production runs, short lead times
• B2B retail and e-commerce: wholesale invoices and stock cycles
• Hotels, hospitality, and catering: seasonal cash flow support
• Agriculture and farming: inputs and operational costs

If you invoice other businesses on credit terms, our panel likely has a solution that fits your industry.

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Invoice Finance vs Other Funding Options

Depending on your goals, you may compare invoice finance with:

• Business loans (secured/unsecured): lump-sum funding repaid over a fixed term
• Overdrafts and revolving credit: flexible drawdown/repayment up to a limit
• Asset finance and equipment finance: fund specific assets with repayments matched to asset life
• Trade finance and supply chain solutions: support purchase orders and supplier payments

A specialist broker can help you weigh up the pros and cons for your situation.

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FAQs About Invoice Finance

Is Fast Business Loans a lender?

No. We connect UK businesses with trusted brokers and lenders. Our service is free for business owners and there’s no obligation to proceed.

Will my enquiry affect my credit score?

Your initial enquiry with us won’t affect your credit score. If you proceed, a provider may run credit checks.

How quickly can funds be available?

Once a facility is set up, approved invoices can often be funded quickly. Set-up times vary by provider and complexity.

What percentage can I advance?

Typical advance rates are around 70–95% of approved invoice values, depending on your sector, debtors, and facility type.

Will my customers know?

With factoring, customers are usually notified and collections may be handled by the provider. With discounting, facilities are often confidential.

Is non-recourse available?

Some providers offer non-recourse (credit protection) for approved debtors. It generally costs more and has criteria.

Are there contracts or termination fees?

Many facilities have minimum terms and notice periods. Providers will outline terms clearly so you can decide before proceeding.

Do you support newly formed companies?

Yes — if you’re a UK Limited Company or LLP raising B2B invoices on credit terms. Providers will assess your debtors, sector, and evidence of delivery.

Which invoices are eligible?

Usually B2B invoices for completed goods/services with proof of delivery or acceptance. Some sectors and debtor types have restrictions.

What does it cost?

Expect a discount rate on funds drawn plus a service fee, and potentially setup or other charges. You’ll receive a transparent quote before you decide.

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Why Choose Fast Business Loans

• Fast and simple: Short form, rapid match to suitable partners
• Trusted connections: Reputable UK brokers/lenders committed to fair treatment
• Sector expertise: Providers who understand your industry
• No obligation: You decide if and when to proceed
• Free to use: We may receive a fee from partners if you proceed. You do not pay us for this service.

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Important Information

• Fast Business Loans is an introducer, not a lender. We do not provide financial advice.
• All rates, figures, and timelines are illustrative and not guarantees. Eligibility and terms depend on your circumstances and each provider’s assessment.
• Facilities are typically available from £10,000 and up.
• Your data is handled securely and shared only with relevant partners to process your enquiry.

Ready to Unlock Cash from Your Invoices?

• Complete a 2-minute form
• Get matched with trusted UK providers
• Receive a quick, no-obligation quote

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