Solutions
The facility types
- Invoice Finance
A way for businesses that sell on credit terms to access a proportion of the value of unpaid invoices before customers pay.
- Invoice Factoring
Release cash against unpaid invoices while the provider manages credit control and collects payment from your customers.
- Invoice Discounting
Draw funds against your sales ledger while continuing to run your own credit control, often without customers being aware.
- Selective Invoice Finance
Finance individual invoices or specific customers as the need arises, rather than committing your whole sales ledger.
Factoring or invoice discounting?
The two most common forms differ mainly in who collects payment and whether your customers know a facility is in place.
| Factoring | Invoice discounting | |
|---|---|---|
| Who collects payment | The provider's credit control team | Your own team |
| Customer awareness | Usually disclosed | Often confidential, subject to provider criteria |
| Control of customer relationships | Shared with the provider | Retained by your business |
| Demands on your systems | Lower | Higher: accurate ledger and reporting expected |
| Service fee | Generally higher, reflecting the collections service | Generally lower |
| Often suits | Smaller or growing firms, lean back offices | Established firms with strong processes |
Common questions
What is invoice finance?
Invoice finance is a way for businesses that sell on credit terms to access a proportion of the value of their unpaid invoices before the customer pays. The provider advances an agreed percentage, then releases the balance, less fees, once the invoice is settled. It comes in several forms, most commonly factoring and invoice discounting.
How much of an invoice can potentially be funded?
Providers generally advance a substantial proportion of the invoice value upfront, with the remainder released when your customer pays. The exact percentage depends on the provider, your sector and the quality of your debtors. We will give you a realistic picture before you approach anyone.
What is the difference between factoring and invoice discounting?
In factoring, the provider typically manages credit control and collects payment from your customers, so the arrangement is usually disclosed. In invoice discounting, you keep control of your sales ledger and collections, and the facility can often be confidential. Factoring tends to suit businesses that want collections support; discounting tends to suit those with established processes.
Will my customers know?
With factoring, usually yes. With invoice discounting, often not: many providers offer confidential facilities where your customers continue to pay you as normal. Whether confidentiality is available depends on the provider's assessment of your business.
How much does invoice finance cost?
Costs typically comprise a service fee, often expressed as a percentage of turnover, and a discount charge on the funds advanced, similar to interest. Some facilities also carry minimum fees or additional charges for services such as bad debt protection. Pricing varies with your turnover, debtor quality and the facility structure. We will make sure you understand the full cost before you commit.
What businesses can use invoice finance?
Most commonly, businesses that invoice other businesses on credit terms for completed work or delivered goods. It is widely used in recruitment, manufacturing, haulage, wholesale, engineering and business services. Businesses selling to consumers, or invoicing in stages before work is complete, may find it harder to fund.
Can I switch invoice finance providers?
Yes, businesses move between providers fairly regularly. Your existing agreement will set out a notice period and possibly exit fees. A new provider will usually manage the transition, including repaying the outgoing provider. We can help you assess whether switching makes sense and how to handle it cleanly.
What happens when I enquire?
You tell us a little about your business and what you are trying to achieve. We follow up for a short conversation to understand the detail, then explain what options look realistic. There is no obligation at any stage, and we will tell you plainly if invoice finance does not look like the right answer.