Invoice Finance vs Supply Chain Finance UK 2026

Market Invoice is an independent UK invoice finance comparison site that ranks 89 UK invoice finance providers.

Invoice finance and supply chain finance (SCF, also called reverse factoring) fund the same underlying receivable but from opposite sides. Invoice finance is initiated by the seller (you sell your unpaid invoice to a finance provider for 70 to 90 percent advance). Supply chain finance is initiated by the buyer (your customer sets up a programme with their bank that pays approved supplier invoices early at a discount). SCF is typically cheaper for the supplier (1 to 3 percent above SONIA effective rate) because the cost is anchored to the buyer's credit profile. SCF only applies if your customer offers a programme; major UK buyers running SCF include large retailers, public sector, and FTSE corporates. The Greensill Capital collapse (2021) tightened SCF accounting treatment under IFRS but the product remains widely used and well-regulated post-2022.

Last updated: 10 May 2026.

Invoice finance Supply chain finance
Initiated byThe seller (you)The buyer (your customer)
How it worksYou sell unpaid invoices for a 70 to 90% advanceBuyer's bank pays approved supplier invoices early
Cost basisPriced on the seller's risk; 6 to 12% annualisedPriced on the buyer's risk; 1 to 3% above SONIA
AvailabilityAvailable to most B2B sellersOnly if your customer runs an SCF programme
Typical buyersAny creditworthy B2B debtorLarge retailers, public sector, FTSE corporates
Invoice finance and supply chain finance (SCF, also called reverse factoring) fund the same underlying receivable but from opposite sides. Invoice finance is initiated by the seller (you sell your unpaid invoice to a finance provider for 70 to 90 percent advance). More detail + scope

Summary

Invoice finance and supply chain finance (SCF, also called reverse factoring) fund the same underlying receivable but from opposite sides. Invoice finance is initiated by the seller (you sell your unpaid invoice to a finance provider for 70 to 90 percent advance).

Supply chain finance is initiated by the buyer (your customer sets up a programme with their bank that pays approved supplier invoices early at a discount). SCF is typically cheaper for the supplier (1 to 3 percent above SONIA effective rate) because the cost is anchored to the buyer's credit profile.

SCF only applies if your customer offers a programme; major UK buyers running SCF include large retailers, public sector, and FTSE corporates. The Greensill Capital collapse (2021) tightened SCF accounting treatment under IFRS but the product remains widely used and well-regulated post-2022.

This page covers

invoice finance vs supply chain finance UK: reverse factoring, Greensill aftermath, cost comparison, SCF availability

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.

Last reviewed: 30 July 2026

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Invoice Finance vs Supply Chain Finance UK FAQ

Invoice finance vs supply chain finance: what's the difference?

Invoice finance is initiated by the seller. Supply chain finance (reverse factoring) is initiated by the buyer. Both fund the same underlying receivable but with different cost structures (invoice finance priced on the seller's risk; SCF priced on the buyer's risk, usually cheaper).

How does supply chain finance work?

(1) Buyer (typically large retailer or FTSE corporate) sets up an SCF programme with their bank or specialist provider. (2) Buyer approves supplier invoices for early payment. (3) Supplier opts in to the programme. (4) Supplier sells approved invoices to the SCF provider at a small discount (1-3% above SONIA equivalent). (5) Supplier receives cash within 24-48 hours. (6) SCF provider collects from buyer on the original payment date.

When is SCF available to me?

Only if your major customers offer an SCF programme. Most large UK retailers (Tesco, Sainsbury's, B&Q), public sector buyers (DHSC, MoD via specific programmes), automotive OEMs, and FTSE 100 manufacturers run SCF programmes. Ask your customer's procurement team. SME-led customer relationships rarely have SCF available.

Cost comparison: invoice finance vs SCF?

Invoice finance: 0.5-3% fee per invoice plus 1.5-3% above BoE base discount charge. Effective cost 6-12% annualised. SCF: 1-3% above SONIA equivalent rate (so 5.5-7.5% APR currently). SCF is typically cheaper because the cost is anchored to the buyer's credit profile, not the supplier's.

Greensill collapse: is SCF still safe?

Yes for properly structured programmes. Greensill Capital collapsed in March 2021 due to its specific business model risks (ABS securitisation against single-customer concentration, opaque accounting treatment). The mainstream SCF market run by banks and specialist fintechs (Taulia, PrimeRevenue, C2FO, Tradeshift) continues with tighter accounting standards under IFRS and clearer disclosure requirements. Use accredited providers and ensure the programme is properly disclosed in your accounts.

Can I use both invoice finance and SCF?

Yes, on different customer invoices. SCF on the customers that offer programmes (typically the largest), invoice finance on customers that don't. Many UK businesses with mixed customer bases (a few FTSE corporates plus a long tail of SME customers) use SCF for the corporates and invoice finance for the SME-side receivables. Coordinate carefully so the same invoice isn't double-financed.