Can I Factor Invoices to Related Companies?
No. Invoices between related companies, group companies, or companies with shared directors/shareholders are excluded from factoring. The provider needs genuine third-party debtors to assess credit risk independently. Intercompany invoices are not financeable.
Why related-party invoices are excluded
Invoice finance prices the credit risk of your customer, not your business. When the customer is a connected company that risk assessment breaks down: you control both sides, the debt can be created or cancelled at will, and the invoice is not evidence of a genuine arm's length sale. Providers treat connected debtors as ineligible at underwriting and exclude them from the funded ledger, so they do not count toward your availability.
Connected typically means common shareholders or directors, a parent or subsidiary relationship, or family-controlled entities. Disclose the relationship up front: an undisclosed connected debtor found during a routine audit can trigger a reserve, a facility review, or in serious cases an allegation of fraud.
What you can do instead
Fund your genuine third-party invoices through a standard facility and keep the intercompany trading off the ledger. If most of your turnover is intercompany, invoice finance is the wrong tool: look at a business loan or other working-capital options. If you are comparing routes, our cost calculator and the provider directory show what each facility funds.
Related questions
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 updated: