Invoice Finance UK: Fund Your Sales Ledger, Not Your Property
By Joshua Giles, Founder and Director · Reviewed by the CoreFi credit team
Last updated 20 July 2026
CoreFi is a broker, not a lender. We do not set rates and lenders make all credit decisions.
In short: Invoice finance advances up to 90% of an unpaid invoice the day you raise it, instead of waiting 30 to 90 days for your customer to pay. Factoring hands collections to the lender; discounting keeps them confidential. No property charge is needed. We place both structures for UK limited companies across most sectors.
Invoice finance works on one mechanic: your lender advances up to 90% of an invoice the moment you raise it, instead of leaving you to wait 30, 60, or 90 days for your customer to pay. When the customer settles, you get the remaining balance back minus fees. The collateral is the debt itself, not your premises.\n\nThe two structures split on who chases the money. With factoring, the lender takes over your credit control and collects from your customers directly, so your customers see that a third party is involved. With invoice discounting, you keep collecting yourself and the facility stays confidential. Most lenders want turnover of at least £500k before they offer discounting, because they are relying on your own collections to protect their position.\n\nWe place most factoring deals with growing businesses that want the admin of chasing payment off their desk. Discounting suits established businesses with a clean ledger and credit control that already works. Neither route takes a first charge over property, and that is the real edge over a term loan, your assets stay unencumbered for other uses.\n\nOne point to be blunt about: the advance rate and fees hinge on your debtor quality, your sector, and how concentrated your ledger is. A business with ten blue-chip customers prices better than one with forty SME customers where three of them are 80% of turnover. We do not quote a rate until a lender has actually looked at your ledger, and as a broker we place the facility rather than lend the money ourselves.
Key Benefits
- Up to 90% of each invoice is advanced on the day you raise it, so your working capital tracks your sales instead of lagging two months behind
- The facility grows with your turnover. You are not back at the table renegotiating a limit every time you land a large contract
- Factoring hands your credit control and collections to the lender, which lifts a real operational load off a stretched finance team
- No property security. The invoices are the collateral, so you keep premises & other assets free for a mortgage, a term loan, or a sale
Frequently Asked Questions
What is the difference between factoring and invoice discounting?
With factoring, the finance company runs your sales ledger and chases payment from your customers on your behalf, so your customers know the facility exists. With invoice discounting, you keep collecting yourself and the lender stays in the background, so the arrangement is confidential. Most lenders set a minimum turnover of around £500k before they offer discounting, because they are trusting your own credit control to protect their position.
How much does invoice finance cost?
Cost comes in two layers. A service fee, usually 0.5% to 3% of turnover, covers the lender's administration and, in factoring, the credit control. On top sits a discount charge, roughly 1% to 3% above base rate, applied to whatever you have drawn down at the time. All in, the effective cost tends to land between 1% and 5% of invoice value, driven by your sector, debtor quality, and the volume you put through. As a broker we cannot give you the exact rate before a lender reviews your ledger, and no one honestly can.
Do I have to factor all my invoices?
Whole-turnover facilities are the standard, and they are cheaper, because the lender gets a diversified pool of debts rather than only the invoices you struggle to collect. Selective invoice finance, sometimes called spot factoring, lets you fund chosen invoices only. It exists, but the per-invoice cost is noticeably higher and fewer lenders offer it.
What happens if my customer does not pay?
That turns on recourse versus non-recourse factoring. With recourse, a customer default sends the debt back to you and you repay the advance. With non-recourse, the lender absorbs the bad-debt risk, subject to credit-insurance limits it sets on each debtor. Non-recourse costs more, and whether it earns its keep depends on how financially strong your customers are and how concentrated your ledger is.
Invoice Finance calculator
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Cash advanced now
£42,500
Fee
£750
Net received
£49,250
Held back
£7,500
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Related Funding Options
Invoice Finance for Recruitment Agencies
Recruitment agencies pay contractors weekly but wait 30 to 60 days to collect. Invoice finance funds payroll from the day you raise the placement invoice. We place these facilities with lenders who know the sector.
Invoice Finance for Manufacturers | Release Cash from Your Sales Ledger
UK manufacturers waiting 60-90 days for payment can release 80-90% of invoice value within 24 hours. We place invoice finance for manufacturing businesses across a range of facility sizes.
Invoice Finance for Transport & Logistics
Haulage and logistics companies can draw cash from unpaid invoices once delivery is confirmed. Invoice finance for UK transport businesses, with POD integration and fuel card options.
How Invoice Finance Works
How invoice finance works: you raise an invoice, the lender advances an indicative 80% to 90% against approved debtors, then pays the balance on settlement.
Invoice Factoring vs Invoice Discounting: What Actually Differs
Invoice factoring vs discounting: one hands credit control to the lender, one keeps it with you. Both advance up to around 90% of invoice value. We broker both and can tell you which lender is likely to approve you.
Invoice Finance Costs Explained
Understand invoice finance cost in the UK: the service charge, discount charge, set-up fees and minimums, with an indicative worked example.
Invoice finance by location
Lender appetite varies by city and region. If you would rather start from where your business is based, these local guides cover the same funding with the local picture.
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Get matched with lendersCoreFi is a trading name of JG Core Ltd (Company #16218779, England & Wales). CoreFi acts as a commercial finance broker and does not provide regulated financial advice. All products described are unregulated business-to-business finance. Information on this page is for general guidance only and does not constitute a formal offer of finance. Terms, rates, and availability are subject to lender criteria and may change without notice.