Summary — TL;DR

Short answer: often yes. Public sector framework invoices and invoices owed by strong main contractors can qualify for invoice finance, but funders will assess debtor identity (public body vs main contractor), invoice certification and acceptance, assignment/anti‑assignment clauses, payment route (direct or via a contractor), retention and dispute risk. Certified, assignable invoices to creditworthy public bodies or established main contractors are usually the most attractive. If invoices sit behind “pay when paid” clauses, large retentions or unresolved defects, funders may reduce advance rates or decline.

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What is invoice finance and why building services firms use it

Invoice finance lets a business unlock cash tied up in unpaid invoices. Two common models are:

• Factoring — a funder buys your invoices and often manages collections.
• Invoice discounting — you retain control of collections; the funder advances against invoices confidentially.

Other options include spot factoring for one-off invoices and specialist retention finance for amounts held back under contracts. Building services firms use invoice finance to buy materials, pay subcontractors, smooth payroll and take on new contracts without waiting 30–120 days for payment.

Free Eligibility Check — takes two minutes and is not an application.

The public sector, framework agreements and main contractors — the key differences

Public sector frameworks (NHS, local authorities, central government frameworks, housing associations) are procurement routes that set contract terms for call‑offs. Invoices may be raised directly to a public body or issued to a main contractor who manages works and bills the client.

Key differences affecting finance eligibility:

• Who legally owes the money: a public body (generally strong credit) or a private main contractor (credit varies).
• Certification process: many public contracts require interim certificates or valuations before payment is authorised.
• Contract clauses: assignment and “pay when paid” provisions can restrict funding.
• Retention and defects liabilities: amounts held back reduce what funders will advance.

Can public sector framework invoices be financed?

Yes — many public sector invoices are attractive to funders because the debtor is a public body with typically high credit quality. However, the following factors determine appetite and advance rates:

What funders will check

• Debtor identity — is the invoice payable by a named public body (e.g. local authority, NHS trust) with verifiable details?
• Assignment / anti‑assignment clauses — does the framework agreement or call‑off prevent assignment of debt? If assignment is prohibited, many funders will decline.
• Certification & acceptance — is the invoice supported by an interim certificate, works completion certificate or formal acceptance that confirms liability to pay?
• Payment route — is payment made directly by the public body or routed through a main contractor or outsourced service provider?
• Payment terms & performance — typical terms (30/60/90 days) and historical payment performance under the framework.

Practical example: a certified interim payment from an NHS trust that can be assigned is normally seen as low risk — funders may offer high advance rates (often 80%+). By contrast, invoices with large unremitted retentions, unsettled defects, or unclear assignment rights are less attractive.

Free Eligibility Check — tell us about your invoices and we’ll match you to lenders or brokers who understand public sector work.

Can main contractor invoices (invoices owed by main contractors) be financed?

Yes — but lender appetite depends heavily on the main contractor’s creditworthiness, contract terms and where your invoice sits in the payment chain.

Key lender concerns

• Main contractor credit & payment history: large, reputable contractors with a strong record are easier to fund.
• Contract chain & enforceability: does your subcontract provide a clear right to payment? Are there “pay when paid” clauses that delay or link your payment to the client receiving funds?
• Certification and employer sign‑off: certified invoices or interim valuations reduce risk; uncertified claims or disputed variations lower advance rates.
• Retentions and defects: retentions reduce available advance and often require specialised retention finance to unlock.
• Security & documentation: funders may request contract copies, POs, recent statements and evidence of certified sums.

Typical outcomes:

• If the main contractor is a national PLC or Tier 1 with certified invoices, funders commonly advance 60–85%.
• For smaller or higher‑risk mains, funders may lower advance rates, require additional security or refuse funding where chain risks exist.

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Common deal structures and how funders treat public sector / main contractor invoices

Building services firms commonly use these solutions:

• Invoice factoring — good for subcontractors who want a full service; funder collects and manages debtor relationships.
• Invoice discounting — confidential, you keep collections; suitable for firms that prefer to manage client contact.
• Spot factoring — one-off invoice advance without a long-term facility.
• Retention finance — specialist facilities to unlock retentions withheld under contracts.
• Reverse/supply‑chain factoring — where a large buyer (public body or main contractor) supports a programme enabling suppliers to be paid earlier, often at better rates.

How advance rates are typically set

• Public body invoices: often higher advance rates (e.g. 75–95%) if certifiable and assignable.
• Main contractor invoices: variable (60–85%) depending on the contractor’s standing and contract certainty.
• Uncertified claims / retentions / dispute-prone invoices: lower rates and sometimes fees for additional due diligence.

Typical paperwork funders request: contract / call‑off, purchase orders, certified valuations, invoices, proof of assignment permission (if required), company accounts and recent bank statements.

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Common hurdles & how to increase chances of acceptance

Major hurdles include anti‑assignment clauses, “pay when paid” mechanisms, long defects liability periods and large retentions. To improve the chance of funding:

• Secure written confirmation of the buyer and contract reference (POs and call‑off references).
• Obtain and retain certification / interim certificates promptly.
• Where possible, negotiate future contracts to allow assignment or include clear payment triggers.
• Consider specialist retention finance or bonding to release withheld sums.
• Work with brokers who have experience of public sector frameworks and subcontractor funding.

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Risks, compliance and what to check before you finance

Invoice finance can improve cashflow, but be aware of:

• Costs: fees, interest and service charges vary widely — compare total cost of funds.
• Security: some funders take broad security (debentures) that can affect future borrowing and assets.
• Personal guarantees: avoid unexpected personal exposures where possible.
• Recourse terms: understand when the facility is recourse vs non‑recourse (who bears bad debtor risk).

Checklist before signing:

• Confirm assignment rights under the contract.
• Understand how retentions and disputes are treated.
• Ask for a full breakdown of all fees and interest, and whether any charges are back‑dated.
• Check notice periods, termination penalties and cross-collateralisation clauses.

Important: Completing our enquiry form is not an application — it helps us match you to lenders and brokers who can provide quotes. We typically help businesses seeking £10,000 and upwards.

Short case study

An anonymised example: an electrical sub‑contractor working on NHS refurbishments was owed certified interim payments totalling £120,000. By using invoice discounting for certified sums the firm drew 80% of their invoices within 48 hours, hired two extra teams and completed additional contract variations — revenue increased and the business avoided costly overdrafts.

Frequently asked questions

Do councils allow assignment of invoices under framework agreements?

It depends. Some frameworks permit assignment or provide a novation process for subcontractor payments; others have strict anti‑assignment provisions. Always check the framework terms and seek written confirmation where possible.

Can a subcontractor use a main contractor’s invoice for finance?

Not directly — funders typically want an invoice that is legally payable to you. If a main contractor is holding funds on behalf of a subcontractor, funders will need clear evidence of entitlement, certification and the contractual basis for payment.

How do retentions affect advance rates?

Retentions reduce the immediately available value of an invoice and therefore lower advance rates. Specialist retention finance exists to convert retention sums to cash, often at a higher cost.

What documents will a funder ask for?

Contracts or call‑offs, purchase orders, signed/certified valuations, invoices, company accounts, ID for directors and recent bank statements. For public sector work, proof of certification and contract references speed decisions.

Is invoice finance expensive for building services?

Costs vary. Well‑structured facilities against certified public sector invoices can be competitively priced. Higher perceived risk (uncertified work, weak main contractors) increases fees and reduces advance rates. Compare offers carefully.

How quickly can I get funds?

For standard certified invoices, many funders can advance within 24–72 hours once checks are complete. Timings depend on documentation and the funder’s KYC process.

Next steps — free eligibility check

If you work on public sector frameworks or bill main contractors and want to know whether your invoices qualify for invoice finance, complete a short enquiry and we’ll match your case to specialist brokers and lenders. It’s quick, non‑obligatory and not an application.

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We can typically assist businesses seeking from £10,000 upwards.

Legal & compliance note

UK Business Loans is an introducer. We do not lend or provide regulated financial advice. We will share your enquiry with trusted brokers and lenders who may contact you with offers. Completing an enquiry is not an application and will not affect your credit score. Always compare fees, APRs and terms before agreeing to any finance.

For more on public sector procurement terms see GOV.UK guidance on framework agreements and procurement, or consult a solicitor for contract-specific interpretation.

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