What Are the Alternatives to Invoice Finance?
Bank overdraft (cheaper but declining availability), business loan (fixed lump sum), merchant cash advance (for card payment businesses), revolving credit facility, asset finance (for equipment), R&D tax credit advance, equity/investment, or simply negotiating shorter payment terms with customers.
The main alternatives, and when each fits
| Alternative | Best when |
|---|---|
| Bank overdraft | You want flexible short-term cover and already have a strong bank relationship; availability has tightened since 2020 |
| Business loan | You need a fixed lump sum for a known purpose and can service fixed monthly repayments |
| Merchant cash advance | You take card payments (retail, hospitality) rather than invoice on credit terms |
| Asset finance | The need is equipment, vehicles or machinery, not working capital against sales |
| VAT or tax loan | The pinch point is a specific quarterly VAT or annual tax bill |
| Equity / investment | You are funding growth, not a timing gap, and are willing to give up ownership |
Invoice finance is usually the cheapest and most scalable option when the problem is specifically that your B2B customers pay on 30 to 90 day terms, because it grows with your sales rather than capping you at a fixed limit. Where the problem is something else (buying a van, paying a one-off tax bill, funding expansion) one of the alternatives above is the better fit. Use our cost calculator to compare the real cost.
Related questions
- Invoice finance vs merchant cash advance
- Invoice finance vs revenue-based finance
- UK business loans compared
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 12 April 2026