Last updated: 11 Aug 2026

Invoice finance

Invoice finance lets your business borrow against the invoices you have already issued, releasing up to 90% of their value within 24 to 48 hours instead of waiting 30 to 90 days for customers to pay. 

  • See what you could raise against your unpaid invoices

  • Compare offers from multiple invoice finance lenders

  • Choose factoring, discounting or a selective facility,

  • A dedicated funding specialist is on hand, start to finish

Capitalise is trusted by 200,000+ UK businesses

  • £2bn in funding approved

  • Regulated by the FCA since 2016

  • 130+ UK lenders on our panel

  • Business credit data powered by Experian

What is invoice finance?

Invoice finance is a way of releasing the cash tied up in your unpaid invoices, rather than waiting for your customers to pay on their usual terms. Instead of your business carrying the gap between issuing an invoice and getting paid, a lender advances you most of that invoice's value upfront, then collects the remaining balance once your customer settles it, minus their fees. It is available to B2B businesses of most sizes, from a young company with its first few contracts to an established business turning over several million pounds a year.

Why use invoice finance?

  • Better cash flow

    Invoice finance turns cash you are already owed into cash you can use today, so you are not left waiting out 30, 60 or 90 day payment terms to cover wages, stock or your next order.

  • Funding that grows with your sales

    Unlike a fixed loan, the amount you can raise through invoice finance grows in line with your invoiced sales, so your funding scales up as your business does, without a fresh application each time.

  • A facility that fits how you want to work

    Whether you want a lender to take on your credit control or you would rather keep it in house and finance invoices confidentially, our panel covers both, so you are not stuck with one way of working.

How does invoice finance work?

Invoice finance follows the same basic pattern whichever type of facility you choose, though who deals with your customer differs depending on the option.

  1. You deliver the work and raise the invoice. Your business supplies the goods or service as normal and sends the invoice to your customer.

  2. You send a copy of the invoice to your lender. This can often be done automatically if your accounting software is connected.

  3. Your lender advances you a percentage of the invoice value. This is typically up to 90%, usually reaching your account within 24 to 48 hours of approval.

  4. Your customer pays the invoice on its normal terms. Depending on the facility, they pay your lender directly or pay you as usual.

  5. Your lender releases the remaining balance, minus their fees. Once the invoice is settled in full, you receive what is left after the discount rate and service charge have been deducted.

What are the different types of invoice finance?

  • Invoice factoring

    You sell your invoices to the lender, who collects payment directly from your customers and takes on your credit control for you. It suits businesses that want funding and credit control support together, though customers will know a lender is involved.

    More on invoice factoring

  • Invoice discounting

    You borrow against your invoices but keep collecting payment yourself, so your credit control stays in house. This is usually confidential, meaning your customers are unaware a lender is involved, which suits businesses that already have an established credit control process.

    More on invoice discounting

  • Selective invoice finance

    You choose which individual invoices to finance rather than financing your whole ledger. It suits businesses that only need funding against certain invoices or customers, not everything they bill.

    More on selective invoice finance

  • Spot factoring

    A one off facility to finance a single invoice, with no ongoing contract. It suits businesses with an occasional cash flow gap rather than a continuous funding need.

    More on spot factoring

How much does invoice finance cost?

The cost of invoice finance depends on your turnover, how many customers you invoice, their payment history and which type of facility you choose. The table below shows what to expect across the Capitalise lender panel.

Cost element

Typical range

Advance rate

Up to 90% of invoice value released upfront, some lenders advance 80% to 85%

Service charge, factoring

Around 0.5% to 3% of invoice value or annual turnover

Service charge, confidential discounting

Around 0.1% to 0.5% of turnover, since you keep credit control

Discount rate

Bank of England base rate plus around 1.75% to 4%, depending on lender and risk

Arrangement fee

Often £500 to £2,000, though some lenders on our panel charge none

Minimum turnover

From around £50,000 a year with specialist lenders, £300,000+ with bank backed providers

A stronger business credit score and customers with a reliable payment history usually bring your discount rate and service charge down, since the lender is taking on less risk.

Is my business eligible for invoice financing?

Most lenders on the Capitalise panel assess your business against the following.

  • Your business trades B2B, invoicing other businesses rather than consumers

  • You have some trading history, though minimum requirements vary by lender

  • Your customers typically pay within 30 to 90 days of invoicing

  • You can provide a sales ledger showing who owes you what and when it is due

  • Your business and its customers show a reasonably healthy credit history

Don't meet every criterion above? Capitalise also works with specialist lenders who consider younger businesses, a shorter trading history or a less than perfect credit record.

What documents do you need to apply for invoice finance?

Having these documents ready will help speed up your invoice finance application:

  • Your aged debtor report or sales ledger, showing outstanding invoices and their due dates

  • 6 months of business bank statements

  • Your latest set of filed annual accounts, if available

  • Details of your main customers, including how long you have worked with them

  • Proof of ID for each business director

How do I apply for invoice finance with Capitalise?

  • Green circle with a white number "1" in the center.

    Tell us about your business

    We'll ask about your turnover, your customers and how much you typically have outstanding on unpaid invoices.

  • Green circle with white number "2" in the center.

    Get matched with lenders

    Your application is matched against our panel of lenders who specialise in invoice finance for businesses like yours.

  • Green circle with the white number 3 in the center.

    Speak to a funding specialist

    A dedicated specialist can talk you through factoring, discounting and selective options, so you choose the facility that fits how you work.

  • White number 4 on a solid green oval background.

    Lenders review your application

    Your funding specialist sends your application to multiple matched lenders, who assess your invoices and customers before making an offer.

  • White number 5 centered on a green circular background.

    Accept an offer and draw down funds

    Once approved, your first advance can reach your account within 24 hours.

What are the advantages and disadvantages of invoice finance?

  • Advantages

    • You get most of an invoice's value upfront instead of waiting 30, 60 or 90 days for your customer to pay.

    • The more you invoice, the more you can typically raise, so your facility grows alongside your business without a fresh application.

    • Your invoices themselves secure the funding, so you don't need to put up other business or personal assets.

    • If you opt for factoring, the lender takes on chasing payment, freeing up time your team would otherwise spend on collections.

  • Disadvantages

    • Service charges and discount rates cam make invoice finance costlier overall than a standard term loan for some businesses.

    • If you opt for factoring, your customers deal with the lender directly, so it's worth telling them in advance how the arrangement works.

    •  A lender assesses the creditworthiness of the businesses you invoice, so a customer with a poor payment history can affect what you're offered.

    • Invoices that are disputed, very old, or owed by a connected company are often excluded from what a lender will fund.

Which kinds of businesses use invoice finance?

  • Recruitment and staffing agencies

    Cover payroll between placing a candidate and getting paid by the client, often on 30 to 60 day terms.

  • Manufacturers and wholesalers

    Free up cash tied up in stock and materials while waiting for retailers or distributors to settle invoices.

  • Logistics and haulage businesses

    Bridge the gap between paying for fuel and drivers upfront and getting paid by clients further down the supply chain.

  • Construction subcontractors

    Keep projects moving without waiting on the longer payment cycles common on larger contracts.

  • Import and export businesses

    Manage cash flow across longer international payment terms and currency delays.

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If unpaid invoices are holding your cash flow back, invoice finance turns what you're already owed into funding you can use now.

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