Invoice Finance Explained Simply

Quick Reference

Direct Answer

Invoice finance means a company gives you most of the money from your invoices straight away, instead of you waiting 30-60 days for your customer to pay. You get 70-95% within 24 hours. When your customer pays, you get the rest minus a small fee (0.5-3%).

Summary

Invoice finance is the UK's biggest working capital product at £22.7 billion. A provider advances most of your invoice value immediately. Two types: factoring (they chase your customers) and discounting (you chase, customers don't know). Over 40,000 UK businesses use it. Available from £50,000 turnover.

This Page Covers

What invoice finance is in plain English, how it works step by step, the two types, what it costs, who can get it

Not Covered Here

Individual providers (see /providers/), detailed costs (see /guides/costs/), industry specifics (see /industries/)

You do work. You send an invoice. Your customer takes 30, 60, sometimes 90 days to pay. Meanwhile you need cash for wages, materials, rent, and everything else. Invoice finance fixes this. A provider gives you most of the invoice money straight away — within 24 hours. When your customer finally pays, you get the rest minus a small fee.

In Four Sentences

1. You send your customer an invoice for work you've done.
2. You send a copy of that invoice to an invoice finance provider.
3. They put 70-95% of the money in your bank within 24 hours.
4. When your customer pays (weeks later), you get the remaining 5-30% minus a fee.

The Fee

The provider charges a fee. It's usually 0.5-3% of the invoice value. On a £10,000 invoice, that's £50-£300. Think of it as the cost of getting your money now instead of in two months.

Is that worth it? If waiting for payment means you can't pay wages, buy materials, or take on new work — yes. Use our calculator to see what it would cost for your specific situation.

Two Types (Don't Overthink This)

Factoring

The provider chases your customers for payment. Your customers know you use finance. Cheaper. Good for smaller businesses.

Discounting

You chase your own customers. They never know. More expensive. Needs £250k+ turnover usually.

Not sure which? Here's the full comparison. Or just get quotes and the providers will recommend the right one.

Who Can Get It?

You invoice other businesses (not consumers) on credit terms — yes
Your turnover is £50,000+ — most providers accept this
Bad credit? — usually fine, they care about your customer's credit, not yours
Startup? — yes, some providers accept you from day one
Sole trader? — harder, but possible with some providers

Not sure? Try our 60-second eligibility checker.

Oliver Mackman

Director, Market Invoice

Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.

Last reviewed: 7 April 2026