Short answer

Invoice finance converts outstanding invoices into cash quickly (often 24–72 hours after onboarding). Cashflow loans are short-term loans against expected income or general business credit — approval and funding depend on lender checks and may take from the same day up to a week. Choose invoice finance to unlock receivables fast; choose a cashflow loan when you need a single, flexible lump sum and don’t have eligible invoices.

Quick comparison at a glance

• Speed: Invoice finance — typically 24–72 hours after set-up. Cashflow loans — same day to 7 days depending on checks and documentation.
• Security: Invoice finance is secured against invoices/debtors; cashflow loans may be unsecured or require security/guarantors.
• Cost: Invoice finance fees are usually an advance percentage + monthly/transaction fees; cashflow loans have interest plus arrangement/exit fees. Ask providers for total cost examples.
• Eligibility: Invoice finance suits businesses with strong receivables; cashflow loans suit businesses with trading history and demonstrable turnover.
• Best for: Invoice finance — recurring cashflow; Cashflow loans — one-off gaps, seasonal peaks, or immediate purchases.

What is a cashflow loan?

Cashflow loans (also called working capital loans or short-term business loans) provide a lump sum to cover immediate operational needs — payroll, supplier bills, or short-term growth. They can be:

• Unsecured short-term business loans
• Secured loans or bridging finance for a short term
• Merchant cash advances (repayments via a percentage of card sales) — note merchant advances differ in cost structure

Typical eligibility requires a minimum trading history, established turnover and company accounts. UK Business Loans typically helps businesses seeking funding of £10,000 and above. Approval speed depends on document readiness and lender risk checks — some specialist lenders can complete approval within hours, while traditional banks take longer.

What is invoice finance (factoring vs discounting)?

Invoice finance lets you raise money against unpaid invoices so you’re not waiting 30–120 days for customer payment. Two main types:

• Invoice factoring: The provider advances a percentage of each invoice (often 70–90%) and usually takes over collections. It’s visible to your customers unless you choose disclosed factoring.
• Invoice discounting: You retain control of collections; the funder provides an advance against invoices but remains confidential to debtors.

Advance rates and fees depend on debtor credit quality and sector risk. Once set up, draws against invoices are quick — many funders release cash within 24–72 hours following verification of invoices.

Head-to-head: Key differences explained

1. Speed of access to cash

Invoice finance often wins on raw speed once the facility is in place: invoices can be advanced very quickly (24–72 hours). Cashflow loans require underwriting — if lenders can rely on quick bank statement checks and no complex security, funding can be same day; otherwise expect several days.

2. What you borrow against

Cashflow loans are generally underwritten against the business’s ability to repay (turnover, accounts, director strength). Invoice finance is directly linked to specific invoices and the creditworthiness of your customers.

3. Security & control

Invoice factoring may require the funder to take control of collections and place a notice on your invoices. Discounting can be confidential. Cashflow loans may demand personal guarantees or charges over company assets.

4. Cost & fees

Invoice finance fees include the advance rate, discount/service fees and administrative costs. Cashflow loans charge interest, arrangement fees and sometimes early repayment penalties. Always ask for representative cost examples and total cost over the term.

5. Eligibility & credit requirements

Businesses with large receivables but mixed credit profiles can often access invoice finance more easily. Cashflow loans suit firms with solid turnover and a clean banking history; higher-risk cases may pay for specialist lenders or brokers.

6. Flexibility & ongoing use

Invoice finance is ideal as a long-term working capital solution that grows with sales. Cashflow loans are usually one-off or short series products for discrete needs.

7. Impact on customer relationships

Factoring can affect how your customers view payment and collections if notices are used. Invoice discounting keeps collections private, preserving customer relationships. Cashflow loans have minimal visible impact on customers.

Which is faster for common scenarios?

Construction contractor awaiting retention or long terms

Invoice finance is usually faster and better because funding links directly to long invoices and retentions — recommended: invoice factoring or specialist construction invoice finance.

Hospitality business facing a seasonal cash gap

If you have unpaid invoices to key trade customers, invoice finance speeds cash flow. For short, one-off seasonal payroll top-ups, a cashflow loan may be quicker and simpler.

Manufacturer needing raw materials to fulfil a single large order

A short-term cashflow loan (or asset finance) often works best as it provides a lump sum quickly without involving debtors.

Sustainability/renewables project with staged payments

Invoice finance suits staged invoices tied to project milestones; if you need upfront equipment funding, cashflow or asset finance may be faster.

Practical timelines and steps to speed approval

To move faster with either option, prepare the following before contacting funders:

• Latest 3–6 months bank statements and VAT returns
• Up-to-date management accounts and creditor/debtor listings
• Copies of the invoices you want funded and debtor contact details
• Company structure details and ID for directors

Once you submit an enquiry via UK Business Loans, matched brokers or lenders often call within hours. Invoice finance funding (after checks) can be delivered 24–72 hours; cashflow loans typically range from same day to one week depending on checks and security.

Costs, traps and what to watch for

• Hidden or admin fees: Some invoice finance contracts include unexpected admin or exit fees.
• Personal guarantees: Cashflow loans may require director guarantees or charges — be clear on exposure.
• Debtor concentration: If most invoices are to one customer, funders may limit advance rates.
• Impact on covenants: Check existing bank covenants before taking new facilities.
• Reserve releases: Final balances in invoice finance are often held until debtor payment — this affects net cash received.

Always ask lenders for a clear cost example (total cost over the facility term), and read terms on early repayment or exit charges.

How UK Business Loans helps you compare and get quick quotes

We make comparison fast and simple. Complete our short enquiry (takes under 2 minutes) and we’ll match your business to lenders and brokers who specialise in your sector and funding need. Matches typically generate calls or email quotes within hours — there’s no obligation and no cost to you.

Get Started — Free Eligibility Check

For more general information about our range of funding options see our business loans overview on business loans.

Minimum funding we typically arrange is £10,000 and above.

Frequently asked questions

Will applying affect my credit score?

Your initial enquiry with UK Business Loans won’t affect your credit score. Lenders may perform credit checks only if you choose to proceed.

Which is cheaper long-term: invoice finance or cash loans?

Costs vary by business and provider. Invoice finance costs depend on debtor risk and fees; cashflow loans depend on interest and fees. Request representative examples from providers.

Can small or growing companies use invoice finance?

Yes — companies with credible invoices to reliable customers can often access invoice finance, even if profits are early-stage.

Do invoice financiers contact my customers?

Some factoring agreements notify customers. If confidentiality matters, discuss invoice discounting or confidential facilities with your broker.

How much can I borrow with a cashflow loan?

Amounts depend on lender and business profile; UK Business Loans typically arranges facilities from £10,000 upwards.

How quickly will I hear from a lender after submitting an enquiry?

Many of our partners respond within hours during business hours; formal quotes typically follow once documents are reviewed.

Are lenders regulated?

Lenders and brokers have various regulatory statuses. UK Business Loans is an introducer and does not provide financial advice — always check a provider’s regulatory status with the FCA or ask the provider directly.

What documents do I need to get a quote?

Basic documents: recent bank statements, copies of invoices you want funded, management accounts, company and director ID. Providing these speeds the process.

Next steps

If you need funding fast, don’t delay. Complete our short enquiry and we’ll match you with lenders and brokers who can often provide quotes within hours. It only takes two minutes and there’s no obligation.

Get Quote Now — Free Eligibility Check

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Legal & compliance notes

UK Business Loans is an introducer. We do not provide loans or financial advice. All lending decisions, terms and costs are determined by the lender or broker. Please review provider terms carefully before accepting any offer.

For guidance on financial promotions and consumer protection see the FCA and for general business finance guidance see GOV.UK.

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