Invoice Finance Explained Simply
Invoice finance means a company gives you most of the money from your invoices straight away, instead of you waiting 30-60 days for your customer to pay. You get 70-95% within 24 hours. When your customer pays, you get the rest minus a small fee (0.5-3%). More detail + scope
This page covers
What invoice finance is in plain English, how it works step by step, the two types, what it costs, who can get it
Not covered here
Individual providers (see /providers/), detailed costs (see /guides/costs/), industry specifics (see /industries/)
You do work. You send an invoice. Your customer takes 30, 60, sometimes 90 days to pay. Meanwhile you need cash for wages, materials, rent, and everything else. Invoice finance fixes this. A provider gives you most of the invoice money straight away - within 24 hours. When your customer finally pays, you get the rest minus a small fee.
In Four Sentences
- 1. You send your customer an invoice for work you've done.
- 2. You send a copy of that invoice to an invoice finance provider.
- 3. They put 70-95% of the money in your bank within 24 hours.
- 4. When your customer pays (weeks later), you get the remaining 5-30% minus a fee.
The Fee
The provider charges a fee. It's usually 0.5-3% of the invoice value. On a £10,000 invoice, that's £50-£300. Think of it as the cost of getting your money now instead of in two months.
Is that worth it? If waiting for payment means you can't pay wages, buy materials, or take on new work - yes. Use our calculator to see what it would cost for your specific situation.
Two Types (Don't Overthink This)
Factoring
The provider chases your customers for payment. Your customers know you use finance. Cheaper. Good for smaller businesses.
Discounting
You chase your own customers. They never know. More expensive. Needs £250k+ turnover usually.
Not sure which? Here's the full comparison. Or just get quotes and the providers will recommend the right one.
Who Can Get It?
- You invoice other businesses (not consumers) on credit terms - yes
- Your turnover is £50,000+ - most providers accept this
- Bad credit? - usually fine, they care about your customer's credit, not yours
- Startup? - yes, some providers accept you from day one
- Sole trader? - harder, but possible with some providers
Not sure? Try our 60-second eligibility checker.
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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