Invoice Finance vs Asset Finance UK 2026

Market Invoice is an independent UK invoice finance comparison site that ranks 87 UK invoice finance providers.

Invoice finance and asset finance fund opposite sides of the balance sheet. Invoice finance advances cash against unpaid B2B invoices (current asset, receivables side). Asset finance funds equipment, vehicles or machinery (fixed asset, equipment side) via hire purchase, finance lease or operating lease. Different products, different cost structures, different terms. Many growing UK SMEs use both: invoice finance for working capital, asset finance for equipment investment. Combined providers (Bibby, Close Brothers, Lloyds Bank Commercial Finance and Aldermore) offer both under one relationship for simplicity.

Invoice finance Asset finance
FundsReceivables: cash against unpaid B2B invoices (current asset)Equipment, vehicles, machinery (fixed asset)
MechanismAdvance against invoices, repaid as customers payHire purchase, finance lease or operating lease
Typical termRevolving with the invoice cycle3 to 7 years
Indicative cost6 to 12% annualised on funded receivables5 to 9% flat rate equivalent on equipment value
Best forWorking capital tied to a sales ledgerEquipment investment blocking growth
Combined providersBibby, Close Brothers, Lloyds Bank Commercial Finance and Aldermore offer both under one relationship
What this page covers

This page covers

invoice finance vs asset finance UK: balance sheet sides, cost, combined providers, HP vs lease

Not covered here

General invoice finance education (see /guides/), individual provider reviews (see /providers/), full pricing breakdown (see /guides/costs/)

AP

Adam Parker

Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd

Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.

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Invoice Finance vs Asset Finance UK FAQ

Invoice finance vs asset finance: what's the difference?

Invoice finance funds the receivables side of the balance sheet (cash advanced against unpaid invoices, repaid as customers pay). Asset finance funds the fixed asset side (equipment, vehicles, machinery) via hire purchase, finance lease or operating lease over 3-7 years. Different products, different mechanisms, complementary uses.

Should I get invoice finance or asset finance first?

Depends on the constraint. If working capital is tight (you can't fund the invoice cycle), invoice finance first. If equipment investment is blocking growth (need a new tractor unit, machine tool, etc), asset finance first. Many growing UK SMEs end up using both.

Can I get both invoice finance and asset finance on the same business?

Yes, very common. Combined providers (Bibby, Close Brothers, Lloyds Bank Commercial Finance, Aldermore) offer both under one relationship simplifying covenant management and security registration. Standalone providers (Hydr for invoice finance, BNP Paribas Leasing for asset) require deed of priority to coordinate debentures.

Cost comparison: invoice finance vs asset finance UK?

Invoice finance: 0.5-3% fee per invoice plus 1.5-3% above BoE base on discount charge. Effective cost 6-12% annualised on funded receivables. Asset finance: 5-9% flat rate equivalent on the equipment value, spread over 3-7 year terms. Different cost basis (fee per invoice vs interest on capital), so direct comparison depends on usage.

Illustrative example: an invoice finance facility with £80k outstanding on average, plus £100k of asset finance over 5 years, would cost roughly £9,800 to £18,600 a year on these ranges (£4,800 to £9,600 on the invoice finance, £5,000 to £9,000 on the asset finance). Your actual quotes will depend on your ledger, the asset and your credit profile.

Asset finance products: HP vs lease?

Hire Purchase (HP): you own the asset at the end of the term after final payment. Higher monthly cost, asset on your balance sheet. Best for assets you want to keep long term (vehicles you'll run for years). Finance lease: you operate the asset for the term, return at end. Lower monthly cost. Operating lease: shorter term, equipment provider takes residual risk. Best for equipment that depreciates fast (IT, vehicles). Each suits different use cases.

Best UK providers offering both invoice finance and asset finance?

Bibby Financial Services (broad SME proposition, both products under one roof), Close Brothers (especially for larger businesses with mixed asset and working capital needs), Aldermore (mid-market with both), Lloyds Bank Commercial Finance (largest UK bank-owned proposition). For specialist asset finance only: BNP Paribas Leasing, Lombard, Investec Asset Finance, Wesleyan Bank.