What is Invoice Finance? How it Works & When to Use It
Turn your outstanding invoices into immediate working capital—invoice finance explained.
What is Invoice Finance?
Invoice finance is a funding solution that lets you borrow money against your outstanding invoices. Instead of waiting for customers to pay (often 30–90 days), you can access that cash immediately. The funder advances you a percentage of the invoice value (usually 80–90%), and gets repaid when your customer pays.
How Does It Work?
You raise an invoice to your customer. You submit it to the funder. They advance you cash (typically next day). When your customer pays, the funder gets repaid and releases the remaining balance (minus their fee). Simple, predictable, no surprises.
Invoice Factoring vs Discounting
In factoring, the funder takes over your credit control—they manage invoicing and collect from customers. In discounting, you keep control and customers pay you directly. Factoring is simpler but customers know about it. Discounting is confidential.
When Should You Use Invoice Finance?
When your customers pay slowly but you need cash quickly. When you've won large contracts requiring upfront delivery costs. When overdraft is expensive or maxed out. When you're in a growth phase and need working capital to fuel expansion.
Costs & Tax Treatment
Invoice finance typically costs 2–5% of invoice value, fully deductible as a business expense. No upfront fees, no hidden charges. You only pay if the deal completes.
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