What Is Invoice Finance?

Invoice finance allows you to access a percentage of your outstanding invoice value as soon as you raise the invoice, rather than waiting 30–120 days for customers to pay.

Common options

• Invoice factoring: You receive an advance (often 70%–95%) and the funder typically manages credit control and customer collections in their name. Useful if you prefer to outsource debtor management.
• Invoice discounting: You receive a similar advance but you keep control of collections. Usually confidential; customers aren’t notified. Often suited to established businesses with robust credit control.
• Selective/spot invoice finance: Fund one invoice or a small batch on demand, with no long-term facility commitment.
• Sector-specific solutions: Tailored options for construction (including applications for payment), recruitment (timesheet finance), logistics, manufacturing and more.

How it helps

• Bridges cash flow gaps created by long payment terms
• Funds new orders, payroll, materials and growth
• Reduces reliance on overdrafts and short‑term loans

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How Invoice Finance Works (Step‑by‑Step)

1. Raise your invoice
   You supply goods/services and issue an invoice on standard terms (for example, net 30, 60 or 90 days).
2. Get an upfront advance
   A lender advances a percentage of the invoice value (typically 70%–95%, depending on your sector, debtor quality and facility type).
3. Customer pays
   Your customer pays the invoice in the usual way (to you for discounting, or to the funder for factoring).
4. Receive the balance
   Once paid, you receive the remaining amount less the lender’s fees.

Simple illustration (for guidance only; not a quote)

• Invoice value: £100,000
• Advance rate: 85% (£85,000 advanced on day one)
• Customer pays in: 45 days
• Fees (example only): 2% service + a discount rate equivalent to interest on the £85,000 for 45 days
• Balance released to you: 15% (£15,000) minus fees

Actual fees and terms vary by provider. Subject to status and approval.

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Who Invoice Finance Is For

Invoice finance can suit UK companies and LLPs that:

• Sell on credit terms to other businesses (B2B)
• Have cash tied up in unpaid invoices
• Experience seasonal peaks, long payment terms or rapid growth
• Want to delegate credit control (factoring) or keep it in‑house (discounting)

Sectors we see strong fit for

• Construction and trades (including main contractors and subcontractors)
• Recruitment and staffing (perm and temp payroll support)
• Manufacturing and engineering (materials, tooling, growth)
• Logistics and transport (fuel, fleet, wages)
• Wholesale, printing, packaging and distribution
• Professional services and consultancies with staged billing

If your industry isn’t listed, we can still help. We match across a wide lender network, nationwide.

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Benefits and Considerations

Benefits

• Faster cash flow: Access funds without waiting 30–120 days.
• Scales with growth: Funding lines often grow as your sales grow.
• Flexible: Choose factoring, discounting or selective finance to fit your preferences.
• Optional bad debt protection: Non‑recourse cover against customer insolvency may be available (terms vary).

Considerations

• Cost: Fees typically include a service fee and a discount/interest charge on the advance. Minimum fees and notice periods may apply.
• Customer experience: With factoring, your customers may interact with the funder; discounting is usually confidential.
• Eligibility: Lenders assess debtor quality, invoicing process, disputes, concentration risk and sector.
• Security: Personal guarantees or debentures may be requested.

We connect you with reputable brokers and lenders who explain all costs clearly, so you can compare like‑for‑like.

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Factoring vs Discounting: Which Is Right for You?

Invoice Factoring

• Collections: Managed by the funder
• Visibility: Often disclosed to your customers
• Admin support: Credit control and ledger management provided
• Typical fit: Younger or fast‑growing businesses, or teams wanting to outsource collections

Invoice Discounting

• Collections: Managed by your business
• Visibility: Usually confidential
• Control: You maintain customer relationships and credit control
• Typical fit: Established firms with strong internal processes

Selective/Spot

• Flexibility: Fund one invoice or a small batch
• Commitment: Minimal ongoing obligation
• Typical fit: Occasional cash flow pinch points, project‑driven work

Not sure which option fits? Try a free eligibility check and get matched with lenders who serve your sector.

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Construction Invoice Finance (Including Applications for Payment)

Construction companies often face irregular billing cycles, staged payments and retentions. Specialist lenders can fund:

• Applications for payment and uncertified stages (where eligible)
• Certified valuations and milestone invoices
• Subcontractor and CIS scenarios
• Long payment terms and main contractor approvals

By releasing cash earlier, you can cover materials, labour, plant hire and mobilise for new contracts.

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Recruitment and Timesheet Finance

Agencies can struggle with the gap between weekly payroll and client payment terms. Specialist recruitment finance can provide:

• Advances against approved timesheets and invoices
• Optional integrated payroll solutions and credit control
• Bad debt protection options (availability varies)

This helps stabilise cash flow, pay temps on time and scale placements.

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Costs Explained (Clear, Fair and Not Misleading)

Invoice finance pricing typically includes:

• Service fee: Often a small percentage of turnover/invoice value for managing the facility (depends on sector, volumes and service level).
• Discount fee: Interest applied to the funds you draw, calculated daily on the outstanding balance until the customer pays.
• Minimum fees: Some facilities have minimum monthly charges.
• Setup/arrangement fees: May apply.
• Term and notice: Contracts can range from rolling to fixed terms with notice periods.
• Optional add‑ons: Bad debt protection, CHOCCs (Customer Handles Own Credit Control), sector modules.

We help you compare apples with apples:

• True total cost based on your ledger profile
• Advance rates and concentration limits
• Notice periods and early termination fees
• Included services (e.g., online portals, Xero/QuickBooks integrations)

Important: Costs and terms vary by lender and are subject to status, credit checks and underwriting. You’ll receive transparent, written quotes so you can decide with confidence.

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What Lenders Look For

• B2B invoices for completed, undisputed work
• Creditworthy customers (debtors)
• Sensible concentration (no single debtor dominates the ledger, or controls are in place)
• Clean invoicing and proof of delivery/timesheets as applicable
• Trading history and management capability
• HMRC position and any existing charges
• Sector dynamics (e.g., construction certification, retentions)

You don’t need perfect credit to enquire. Some partners support businesses with historic credit issues, subject to assessment.

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How UK Business Loans Works

• Complete a 2‑minute form: Tell us about your business, sector and typical monthly invoicing.
• We match you with trusted UK lenders and brokers: We’ll introduce you to specialists for your exact needs (factoring, discounting or sector‑specific).
• Fast responses: Expect a call or email, often within hours, to discuss options and get a no‑obligation quote.
• Compare and choose: Review clear, written terms. Proceed only if you’re happy.

We never pressure you to proceed. Your details are shared only with approved partners relevant to your enquiry.

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Why Choose UK Business Loans for Invoice Finance?

• Quick matching to relevant providers
• Free service, no obligation to proceed
• Partners who follow fair treatment principles and clear communication
• Sector specialists for construction, recruitment, manufacturing and more
• Secure, confidential handling of your information
• UK‑wide coverage

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Documents and Information to Have Ready

• Basic business details (name, company number, trading start date)
• Average monthly invoice value and debtor list
• Sample invoices, proofs of delivery or timesheets
• Standard payment terms and any retentions (construction)
• Latest management accounts (if available) and bank statements
• Details of any existing finance facilities or charges

Don’t worry if you don’t have everything to hand — start your enquiry and a specialist will guide you.

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Alternatives to Invoice Finance

If invoice finance isn’t the right fit, you can still explore:

• Business line of credit/cash flow loans
• Asset finance and equipment leasing
• Merchant cash advance (card‑based)
• Short‑term unsecured business loans
• Trade finance or purchase order finance

Tell us your goal and we’ll introduce relevant providers.

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FAQs: Invoice Finance UK

Is UK Business Loans a lender?

No. We are an introducer. We connect UK businesses with reputable brokers and lenders who provide finance directly.

Does it cost to use your service?

No, it’s free for business owners and there’s no obligation to proceed.

Will an enquiry affect my credit score?

Completing our enquiry form will not impact your credit score. Partners may carry out checks if you proceed.

How much can I advance?

Typical advance rates range from 70%–95% of eligible invoice value, depending on sector, debtor quality and facility type. The exact amount is set by the lender.

What does it cost?

Fees typically include a service fee plus a discount/interest charge on funds advanced. Minimum fees and contract terms may apply. You’ll receive a clear, written quote before proceeding.

Will my customers be contacted?

With invoice factoring, customers are usually notified and collections may be managed by the funder. With invoice discounting, collections usually remain with you and can be confidential.

Can construction or recruitment invoices be funded?

Yes. Specialist facilities exist for applications for payment, staged billing, timesheets and payroll. Eligibility varies by lender — we’ll match you to sector specialists.

How quickly can I get funding?

Once set up, funds can be released within 24 hours of submitting invoices. Initial setup can be completed quickly once documents are provided.

Can start‑ups apply?

Some lenders will consider early‑stage businesses with suitable debtor books and processes. Tell us about your situation and we’ll connect you to appropriate partners.

Are personal guarantees required?

Some lenders may request guarantees or security, depending on the facility and your business profile.

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Compliance, Transparency and Important Information

• Not a lender, no advice: UK Business Loans is not authorised to provide financial advice and is not a lender. We act as an introducer to brokers and lenders.
• Fair, clear and not misleading: We aim to present information that is balanced, accurate and understandable. Quotes and eligibility are determined by lenders after assessment.
• Subject to status: All finance is subject to status, credit checks and underwriting. Terms, fees and availability vary by provider and sector.
• Geographic scope: We support businesses across the UK.
• Data privacy: Your details are shared only with selected partners relevant to your enquiry and handled securely.

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Ready to Improve Your Cash Flow?

Unlock working capital from your unpaid invoices with a solution tailored to your sector and customers. Get matched to specialist lenders and brokers today — fast, free and with no obligation.

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