Invoice Finance: Release Cash From Invoices (UK)

What is invoice finance and how does it work?

Invoice finance lets you unlock cash from your outstanding invoices before your customers pay. Instead of waiting 30, 60 or 90 days for payment, you advance most of the invoice value immediately and receive the remainder (minus the fee) when the customer pays. It is one of the most common forms of business finance in the UK, with over £20 billion advanced to UK businesses annually. Specialist invoice finance providers on Fundably’s 50+ lender panel include Triver, alongside broader multi-product lenders such as Funding Circle. You can compare invoice finance alongside term loans and revenue-based finance in a single application.

How it works

1. You raise an invoice to a customer for goods or services delivered
2. You share the invoice with your invoice finance provider
3. The provider advances 80–95% of the invoice value, typically within 24 hours
4. Your customer pays the invoice on their normal payment terms
5. When payment is received, the provider releases the remaining amount to you, minus their fee

Example:

• Invoice value: £50,000
• Advance rate: 85% → advances you £42,500 today
• Customer pays in 60 days
• Fee: 2% of invoice value → £1,000
• Final payment to you: £50,000 − £42,500 (already received) − £1,000 (fee) = £6,500

Types of invoice finance

Invoice discounting (confidential)

The most common form for established businesses. You continue to manage your own sales ledger and credit control. Your customers do not know that invoices are being financed. Most invoice discounting facilities require strong credit control processes and a minimum annual turnover of around £250,000 (some lenders set the bar higher).

Invoice factoring

The provider takes over credit control, chasing payments from your customers under their own name (or sometimes under yours). Often preferred by smaller businesses that don’t have a dedicated accounts receivable function. Your customers will typically know the invoices have been factored.

Selective/spot invoice finance

Finance individual invoices as needed, rather than the whole ledger. More flexible, typically more expensive per invoice. Good for businesses that occasionally have large one-off invoices they want to advance.

Costs

Invoice finance fees typically include:

Service fee (factoring only): 0.5–3% of annual turnover, charged as a percentage of each invoice financed. Covers credit control and ledger management.

Discount fee: similar to an interest rate, charged on the funded balance per day or per month. Equivalent APR is typically 3–12%.

Additional fees: some providers charge minimum monthly fees, termination fees or audit fees. Always check for these in the small print.

All rates and fees shown are indicative only and subject to individual lender assessment. The terms your business receives will depend on your debtor book quality, turnover and the lender’s own criteria.

Which businesses benefit most from invoice finance?

Invoice finance works best for:

• B2B businesses with commercial customers on credit terms (30–90 day payment terms)
• Businesses with recurring, large invoices rather than many small retail transactions
• Growing businesses that need working capital to fulfil new contracts
• Businesses with slow-paying customers, particularly in construction, recruitment, manufacturing and professional services
• Businesses that a bank has declined, since the debtor book, not the business’s credit, is the security. If this applies to you, see our guide on funding options after a bank rejection

What invoice finance does not suit

• Businesses without outstanding B2B invoices (retailers, hospitality, consumer services). Revenue-based finance may be a better fit for these businesses.
• Businesses whose customers are consumers (B2C), as most invoice finance requires commercial debtors
• Businesses with very small average invoice values, where administration costs make it uneconomical

How to compare invoice finance providers

Invoice finance rates and terms vary significantly. Key comparison points:

• Advance rate (how much of the invoice is advanced)
• Discount fee (the ongoing cost of the facility)
• Service fee (if factoring)
• Minimum monthly fees
• Termination and notice period
• Reporting and transparency of cost

Apply through Fundably as a commercial finance broker to compare invoice finance options across our 50+ lender panel with one soft-credit application. Fundably returns multiple offers within hours so you can compare providers side by side.

Compare invoice finance offers for your business on Fundably.

Frequently asked questions

What is the difference between invoice factoring and invoice discounting?

With invoice factoring, the lender takes over your credit control and collects payments from your customers directly. Your customers will know the invoices have been financed. With invoice discounting, you retain control of credit control and collections, and the arrangement is typically confidential. Discounting is more common for established businesses with strong internal processes; factoring suits smaller businesses that need the lender to manage collections.

How quickly can I access cash through invoice finance?

Most invoice finance providers advance funds within 24 hours of receiving the invoice. Initial setup of a facility typically takes 1–2 weeks. Selective or spot invoice finance can sometimes be arranged faster for businesses that need one-off advances.

What advance rate can I expect?

Most lenders advance 80–95% of the invoice value upfront. The remaining balance, minus fees, is released when your customer pays. Higher advance rates are typically available to businesses with strong debtor quality and low bad debt history.

Does invoice finance affect my customer relationships?

Invoice discounting (confidential) has no impact on customer relationships. Your customers pay you as normal and are unaware of the arrangement. Invoice factoring means the lender contacts your customers directly for payment, which some businesses prefer to avoid.