Invoice Finance Calculator UK
Calculate invoice factoring and discounting costs. See your advance amount, finance fee, and net cash received. UK rates included.
Last updated: March 2026
Invoice Finance Cost Calculator
Calculate advance amount, finance fee, and net cash received for invoice factoring or discounting
Typical UK Invoice Finance Rates (2026)
Finance Rate by Invoice Size and Sector
| Invoice / Facility Size | Finance Rate (per 30 days) | Advance Rate | Typical Providers |
|---|---|---|---|
| Under £10,000 (selective) | 2% – 3% | 70% – 80% | MarketInvoice, Kriya, Skipton |
| £10K – £50K | 1.5% – 2.5% | 80% – 85% | Bibby, Close Brothers, Aldermore |
| £50K – £250K | 1% – 2% | 85% – 90% | HSBC Invoice Finance, Lloyds, Barclays |
| £250K – £1M+ | 0.5% – 1.5% | 85% – 90% | Big bank facilities, specialist ABL lenders |
Advance Rates by Sector
| Sector | Typical Advance Rate | Notes |
|---|---|---|
| Recruitment / staffing | 85% – 95% | High-quality debtors; very common in sector |
| Manufacturing | 80% – 90% | Depends on debtor creditworthiness |
| Logistics & transport | 80% – 90% | Strong sector for invoice finance |
| Professional services | 75% – 85% | Lower if work in progress risk exists |
| Construction | 60% – 75% | Higher risk due to retentions; lower advance |
| IT & technology | 75% – 85% | Good rates if debtors are large businesses |
What Is Invoice Finance? A Complete Guide for UK Businesses
Invoice finance is one of the most flexible and widely used forms of business funding in the UK. According to UK Finance, asset-based lending (of which invoice finance is the primary component) supports over 40,000 UK businesses and advances more than £20 billion annually. Despite this scale, many UK SME owners remain unfamiliar with how it works and whether it could benefit their business.
At its core, invoice finance solves a fundamental cash flow problem: you have completed work or delivered goods, you have raised an invoice, but you must wait 30, 60, or 90 days for your customer to pay. During that waiting period, your capital is effectively locked up — you cannot reinvest it, pay suppliers, meet payroll, or pursue growth opportunities. Invoice finance unlocks that capital by advancing you a percentage of the invoice value immediately, typically within 24–48 hours of submitting the invoice to your provider.
How Invoice Finance Works: Step-by-Step
- You deliver goods or services to your business customer (the debtor) and raise a sales invoice.
- You submit the invoice to your invoice finance provider (either in real time via an online platform, or in a batch).
- The provider advances you typically 70–90% of the invoice value, usually within 24–48 hours. This is the advance amount.
- You receive the advance and can use it immediately for any business purpose: payroll, supplier payments, investment, or working capital.
- Your customer pays the full invoice amount on their normal payment terms — either to the provider (factoring) or to you (discounting).
- The remaining balance (10–30% held as reserve) is released to you, minus the finance fee and any service charges.
Invoice Factoring vs Invoice Discounting: Key Differences
The two main types of invoice finance differ primarily in who manages the collection of payment from your customers:
Invoice Factoring
- Finance provider manages your sales ledger
- Provider collects payment directly from customers
- Your customers know you are using finance
- Includes credit control and bad debt protection (optional)
- Typically higher overall cost due to service component
- Suitable for: SMEs up to £500K turnover, businesses wanting to outsource credit control
Invoice Discounting
- You manage your own sales ledger
- You collect payment from customers as normal
- Customers are unaware (confidential)
- You maintain full credit control function
- Typically lower cost (no credit management service)
- Suitable for: Established businesses £500K+ turnover with strong credit management
Selective invoice finance (also called spot factoring or single invoice finance) allows you to raise finance against individual invoices rather than your entire ledger. This is more expensive per invoice but gives maximum flexibility, and is popular with UK businesses that only occasionally need to accelerate cash flow rather than funding the entire book. Minimum invoice values for selective facilities typically start at £5,000–£10,000.
Understanding Invoice Finance Costs
Invoice finance pricing typically has two distinct components that businesses must understand:
- Service fee / administration charge: Usually expressed as a percentage of gross turnover financed, typically 0.2–2%. This covers the provider’s credit management, reporting, and administration costs. For discounting facilities, this charge is lower.
- Discount charge (finance rate): Applied to the funds actually drawn, charged as a percentage per day or per 30 days. Typical rates: 0.5–3% per 30 days. This is the equivalent of an interest charge on the advance amount.
Example: A £25,000 invoice, 85% advance rate (£21,250 advanced), 1.5% per 30 days finance rate, 60-day payment terms. Finance fee = £21,250 × (1.5% × 2) = £637.50. Net received after 60 days = £25,000 − £637.50 = £24,362.50. Effective annual cost ≈ 13% APR on the advance. For many UK businesses, this cost is justified by the cash flow benefit, ability to take on larger contracts, and avoidance of more expensive alternatives like overdrafts (often 15–20% APR) or director loans.
How Invoice Finance Helps UK SME Cash Flow
Cash flow problems are the leading cause of UK SME failure — more companies collapse due to cash flow issues than losses. Invoice finance directly addresses the most common cause: the gap between delivering work and receiving payment. For a UK recruitment agency placing contractors, invoices might go out on Friday but not be paid for 60 days — yet the agency must fund weekly payroll continuously. Invoice finance turns those 60-day debtors into same-day cash.
UK businesses with seasonal demand spikes — such as logistics firms in Q4, manufacturers fulfilling large seasonal orders, or event companies — use invoice finance to bridge the gap between fulfilling large orders and receiving payment. This allows them to accept contracts they could not otherwise fund without the cash flow cushion that invoice finance provides.
Eligibility Criteria for UK Invoice Finance
Invoice finance is available to a wide range of UK businesses, but providers typically require:
- B2B sales only: Invoices must be raised to other businesses, not individual consumers
- Clear title to receivables: The invoices must represent completed work or delivered goods — not work in progress
- Creditworthy debtors: Your customers must be creditworthy; providers assess debtor quality as a primary risk factor
- Minimum turnover: Full ledger facilities typically require £100,000–£250,000 annual turnover; selective facilities may be available below this
- VAT registration: Most providers require the business to be VAT registered
- Limited company or LLP: Most mainstream providers require incorporation; some serve sole traders
Industries that typically do not qualify for standard invoice finance include: retail (consumer sales), construction with retention clauses (specialist products available), businesses with significant disputed invoices, and subscription-based businesses with recurring monthly billing models. If your business does not qualify for mainstream invoice finance, consider selective invoice finance platforms or asset-based lending alternatives.