Invoice finance

What it means

Invoice finance is an umbrella term for arrangements that let a business raise cash against the value of its outstanding invoices. It covers factoring, where invoices are sold and the financier collects, and invoice discounting, where you borrow against the invoices but keep collecting yourself, often without customers being told.

The aim is to bridge the gap between issuing an invoice and being paid, smoothing cash flow.

Is it right for you?

Invoice finance has a cost — fees and charges that reduce what you net — so it suits businesses whose growth or cash needs outpace their collection times. It is worth comparing against simply collecting faster. Model the trade-off with our free tools, and see invoice factoring for one common form.