Invoice Finance — what you need to know

Invoice finance allows businesses to unlock the cash tied up in unpaid invoices — often within 24 to 48 hours of raising them. If your business sells to other businesses on credit terms, you may be waiting 30, 60, or even 90 days to get paid. Invoice finance bridges that gap, giving you immediate access to working capital without taking on a traditional loan. Promise Money works with a panel of whole-of-market lenders and charges no broker fee to businesses.

Read the page or click the links below to jump to the section you need.

• What is invoice finance?
• Invoice factoring vs invoice discounting
• How does it work?
• What does it cost?
• Who is eligible?
• Spot factoring and selective options
• How to apply

Want more detail? Read our The Invoice Finance 100 — 100 questions and answers about invoice finance.

What is invoice finance?

Invoice finance is a form of asset-based lending where your outstanding sales invoices act as security. A lender advances you up to 85–90% of the invoice value as soon as the invoice is raised. Once your customer pays, the remaining balance is released to you minus the lender’s fee. It is not a loan in the traditional sense — you are simply getting paid faster for work you have already done.

Invoice factoring vs invoice discounting

Invoice factoring — the lender takes over management of your sales ledger and chases payment from your customers on your behalf. Because the lender contacts your customers directly, the arrangement is disclosed. This is the best option for smaller businesses that want to reduce credit control workload. Invoice discounting — you continue to manage your own ledger and collect payments as normal. The facility is typically confidential, meaning your customers are unaware of the arrangement. This suits larger, more established businesses with their own credit control function.

How does it work?

The process is straightforward: you raise an invoice to your business customer as normal; you submit the invoice to your lender through an online portal; the lender advances up to 85–90% of the invoice value, often within 24 hours; your customer pays on their agreed terms; the lender releases the remaining balance, minus a small service fee and discount charge.

What does it cost?

Invoice finance has two main cost elements. A service fee of typically 0.5–3% of your annual turnover covers administration and, for factoring, credit control. A discount charge — similar to overdraft interest — applies only to the funds you actually draw. Together these are often comparable to, or less than, the cost of a traditional overdraft. Your Promise Money adviser will provide a clear cost schedule before you make any commitment.

Who is eligible?

Invoice finance works best for UK-registered businesses that sell goods or services to other businesses on credit terms. Most lenders require a minimum annual turnover of around £50,000, though some specialist providers work with smaller businesses. Both limited companies and sole traders may qualify. Businesses with adverse credit history are considered by specialist lenders on our panel.

Spot factoring and selective options

If a whole-ledger facility does not suit your business, selective invoice finance — sometimes called spot factoring — lets you choose individual invoices to fund as and when needed. There is no long-term contract, making it ideal for seasonal businesses or those with occasional large invoices.

How to apply

Complete the enquiry form on this page or call us on 01902 585020. Promise Money does not charge a broker fee to businesses for invoice finance. We will review your invoicing profile and debtor book, then present options from across our lender panel with clear cost comparisons. Decisions in principle can often be obtained within 24 hours. There is no obligation at any stage.

Promise Money is authorised and regulated by the Financial Conduct Authority (FCA Ref: 681423).

For more in-depth guidance, explore The Invoice Finance 100 — expert answers to 100 common questions.