Invoice Finance

Invoice Finance is one of the most popular forms of working capital finance.

The lender will advance you money against the value of your outstanding invoices, which means that the size of your facility keeps pace with the growth of your business.

Another advantage of invoice finance is that the lender takes its primary security from the invoices themselves, which can be helpful when other security options are limited.

Invoice Finance comes in many forms:

  • Invoice discounting - where the lender advances a percentage of the invoice value and retains a proportion for itself as its fee
  • Invoice factoring - the same as invoice discounting, but the lender also provides a credit control and collection service
  • Spot factoring or single invoice finance - invoice discounting on individual invoices rather than the whole ledger
  • Invoice trading - invoice discounting in a peer-to-peer framework
  • Trade finance - invoice finance in an export and import scenario.

Things to look out for when considering an invoice finance facility are:

  • The level of discount that will applied to any invoice
  • Limits that might be applied to individual customers - known as debtor concentration limits
  • The full extent of the fees, including arrangement, administration and renewal fees.

Talk to us about whether an invoice finance facility could be right for your business. We will help you navigate the market and make sure you fully understand the costs and structure of any facility that is arranged.

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Explore your options with The Business Finance Guide

from The British Business Bank