Invoice finance: funding against invoices you have already issued
A plain-English guide to how invoice finance works, who it suits, the difference between factoring and discounting, and what it typically costs.
- Typical advance80–90%
- Funds released in24–48 hrs
- Not a loanScales with sales
- Two main formsFactoring / discounting
- Checking your optionsSoft search only
Who it fits
- You invoice other businesses on 30 to 90-day terms
- You have a UK limited company, LLP or plc
- Growth is outpacing cash flow, not profitability
- You already carry £10,000 or more in unpaid invoices
- You sell to consumers, not other businesses
- You invoice on immediate or cash-on-delivery terms
- Your customer book is mostly overseas or unrated
- You need a fixed lump sum unrelated to sales volume
Factoring vs discounting, at a glance
| Invoice factoring | Invoice discounting | |
|---|---|---|
| Who collects payment | The funding partner, direct from your customer | You, as normal |
| Visible to customers | Usually yes | Usually no (confidential) |
| Typical advance rate | 80–90% | 85–90% |
| Best suited to | Smaller books, thin credit-control teams | Established books with an in-house credit-control process |
| Minimum turnover (typical) | From roughly £50,000/year | From roughly £250,000/year |
A third option, selective invoice finance, sits outside this table entirely: you choose which individual invoices to fund rather than committing your whole book. See selective invoice finance for how that works, or read the full factoring vs discounting comparison for a decision checklist.
Advance rates
Advance rates depend on your sector, customer concentration and debtor quality, but most UK facilities land in the 80–90% range of gross invoice value on day one, with the remaining balance (minus fees) released once the customer pays in full.
What it costs
Two charges make up the cost of most facilities: a service fee (a percentage of turnover, covering credit control and administration) and a discount fee (an interest-like charge on funds drawn, usually quoted as a margin over base rate). See invoice factoring or invoice discounting for worked examples with real numbers. Beyond those two headline fees, watch for the extras some providers bury in the small print: minimum-usage charges, CHAPS transfer fees, audit fees, renewal fees and exit fees. Done & Due screens for facilities that set the full cost out up front. See what invoice finance actually costs for the full fair-range vs red-flag breakdown.
The market, briefly
UK invoice finance providers advanced roughly £22.7 billion in 2025, yet under 1% of the country's 5.6 million SMEs use it (MarketInvoice UK Stats 2026). Meanwhile 62.6% of UK SME invoices are paid late, and the average small business is sitting on £22,000 in outstanding invoices at any one time (FSB/GoCardless Late Payments 2025). The gap between how useful the product is and how few businesses use it is mostly awareness, not fit: 59% of UK firms say they have never heard of invoice finance, but 83% say they would recommend it once it is explained (MarketInvoice UK Stats 2026).
Frequently asked questions
No. A loan is a fixed sum you repay on a schedule regardless of what your customers do. Invoice finance advances cash against invoices you have already issued, and the facility grows and shrinks with your sales rather than sitting on your balance sheet as debt.
A first facility typically completes within a few working days of the funding partner receiving your invoice book, bank statements and Companies House details. Funds against new invoices then release within 24 to 48 hours of you raising them.
No. Checking your options with Done & Due uses soft searches only. A hard credit check only happens if you choose to proceed with a specific funding partner, and only at that later stage.
No. Invoice finance is underwritten mainly against the quality of your invoice book and your customers’ payment history, not your profit and loss account. Many businesses use it precisely because they are growing faster than their cash flow allows.
This depends on whether the facility is recourse or non-recourse. On a recourse facility, an invoice unpaid past an agreed date is deducted back from your account. Non-recourse facilities include bad-debt protection, usually at a higher cost. We flag this clearly for each option.
Two minutes, soft checks only, no impact on your credit score.
See how much you could releaseLast reviewed: August 2026
See how much you could release.
Two minutes, soft checks only, no impact on your credit score.