Invoice finance
Compare Invoice
Finance
What we do
Compare Advantage is a free comparison service for businesses waiting to be paid. Tell us about your invoices and customers, and our partner, FCA-authorised broker Halo Corporate Finance, checks your enquiry against the 130+ lenders on its panel, from factoring companies to confidential invoice discounting and single-invoice providers.
- Factoring, invoice discounting or single invoices
- For businesses that invoice other businesses
- Funding that grows as your sales grow
Prefer to talk? Call 0330 057 7175
- 130+ lendersOn our partner’s panel
- £5k to £1mLoans and asset finance
- One enquiryInstead of one per lender
- FCA-authorised partnerHalo Corporate Finance
- Free to enquireNo obligation to apply
Compare before you apply
Invoice finance agreements differ more than they look
Two invoice finance offers can advance the same share of your invoices and still cost very different amounts once the service fee, discount charge and extras are added up. They also differ on the things that matter later: how long you are tied in, how much notice you must give, whether your customers deal with you or the provider, and what happens when a customer does not pay. Comparing them side by side, before you sign, is the only way to see it.
- 1
Tell us once
Two minutes on the form: how much, what it is for and a few details about the business.
- 2
The panel is checked
Halo Corporate Finance matches your enquiry against the 130+ lenders on its panel.
- 3
You choose
Halo talks you through the options that fit. You decide whether to apply. There is no obligation.
What to compare
- How much of each invoice is advanced, and how quickly the rest, less fees, is paid over once your customer settles.
- All the charges, not just the headline fee: the service fee, the discount charge on money drawn, and any extras for credit checks, audits or refactoring old invoices.
- The minimum term and notice period. Many invoice finance agreements run for a fixed period and need written notice to end. Know how you would leave before you join.
- Whether your customers will know, and who chases them. Factoring is usually disclosed; confidential invoice discounting is not.
- Bad debt protection, which covers you if a customer fails to pay at all, at a cost. Without it, an unpaid invoice comes back to you.
How it works
Closing the gap between the invoice and the payment
A business that sells on credit pays for the work long before it is paid for it. Invoice finance turns that waiting time into cash you can use now.
- 1
Day 0
You do the work
Wages, materials and overheads are paid. The invoice goes out.
- 2
Day 1
You are advanced most of it
The invoice finance provider pays you an agreed share of the invoice straight away.
- 3
Day 30 to 60+
Your customer pays
Payment goes to the provider, or to you to pass on, depending on the type of facility.
- 4
Then
You receive the balance
The remainder of the invoice, less the provider’s fees, is released to you.
Because the facility follows your sales, it grows as you invoice more. That is the main difference from a fixed loan or overdraft, and why invoice finance is often used to fund growth.
Types of invoice finance
Factoring, discounting, single invoice or ABL?
The four main options differ on who collects from your customers, whether they know, and how tied in you are.
| Feature | Factoring | Invoice discounting | Single invoice finance | Asset-based lending |
|---|---|---|---|---|
| How it works | Provider advances against your invoices and runs your sales ledger, collecting from customers | Provider advances against your invoices; you keep collecting from customers yourself | You choose individual invoices to fund, when you need to | A wider facility lending against invoices plus stock, plant or property |
| Do customers know? | Yes, they pay the provider | Usually not | Often yes, depending on the provider | Usually not for the invoice element |
| Who it usually suits | Smaller or growing businesses without a full credit control team | Established businesses with good credit control and larger turnover | Businesses with occasional large invoices or seasonal peaks | Larger businesses with significant assets |
| Commitment | Usually a contract for a set term | Usually a contract for a set term | Often no long-term contract | Usually a contract for a set term |
A general guide. Each provider sets its own terms.
Is it right for you?
Who invoice finance suits
Invoice finance providers lend against your customers’ promise to pay. So the quality of your customers, and how reliably they pay, matters as much as your own accounts.
It usually suits
- Businesses that invoice other businesses or the public sector
- Customers on 30, 60 or 90-day terms
- Growing sales, where cash lags behind the order book
- Seasonal peaks, such as building stock before a busy period
- Firms that have just won a big contract
It usually does not suit
- Businesses that sell to consumers, paid at the till
- Invoices for work not yet finished, such as stage payments, for most providers
- Customers who routinely take more than 90 days to pay
- Businesses with very few customers, where one late payer is a big risk
- Invoices already disputed by the customer
Late payment in figures
Waiting to be paid is normal. It is still expensive.
Payment by large businesses has improved since 2018, but a month’s wait is standard and about one invoice in seven is still paid late.
32 days
the average time large UK businesses took to pay their suppliers in 2025
15%
of invoices to large UK businesses were paid late in 2025
£11bn
a year, the government’s estimate of what late payment costs the UK economy
Sources: Department for Business and Trade, large businesses’ payment practices and performance statistics 2025 (July 2026); GOV.UK, May 2026.
Your rights
What the law says about paying late
Invoice finance fixes the cash flow, but you still have rights when a business customer pays late. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can claim interest at 8% above the Bank of England reference rate, plus fixed compensation for the cost of recovering the debt.
Claiming them can feel awkward with a customer you want to keep, but knowing they exist helps when you agree payment terms.
Fixed compensation
£40 for debts under £1,000, £70 for debts from £1,000 to £9,999.99, and £100 for debts of £10,000 or more, on top of the interest.
Changes on the way
The Commercial Payments Bill, introduced in May 2026, proposes a 60-day cap on payment terms when large businesses pay smaller suppliers, mandatory late payment interest and stronger powers for the Small Business Commissioner. It is still going through Parliament and is not yet law.
The market
A mainstream way to fund a business
UK Finance says its members provide well over £20 billion of invoice finance and asset-based lending to tens of thousands of UK businesses at any one time. It is used by small firms and large ones, across manufacturing, wholesale, recruitment, logistics and business services.
Government-backed
The Growth Guarantee Scheme
Accredited lenders can use the government’s Growth Guarantee Scheme for invoice finance and asset-based lending from £1,000, for businesses with turnover up to £54 million. The guarantee is to the lender: your business remains liable for the full amount.
Need cash for a one-off cost rather than a steady gap? Compare small business loans or, for a tax bill, VAT and tax loans.
What is invoice finance?
Invoice finance releases the cash tied up in invoices your customers have not paid yet. A provider advances most of the value of each invoice when you raise it, then pays you the rest, less its fees, when the customer pays.
What is the difference between factoring and invoice discounting?
With factoring, the provider runs your sales ledger and collects payment from your customers, so they know you use it. With invoice discounting you keep collecting yourself, and it is usually confidential. Discounting tends to suit larger, established businesses with their own credit control.
How much of an invoice can I get?
Providers typically advance up to around 90% of an invoice’s value, depending on your customers, your sector and your track record. The rest is paid to you, less fees, when the customer pays.
Will my customers know I use invoice finance?
With factoring, yes, because they pay the provider. With confidential invoice discounting, usually not. With single invoice finance, it depends on the provider.
What does invoice finance cost?
Usually a service fee, often a percentage of turnover or a fixed monthly charge, plus a discount charge, like interest, on the money you draw. There may be extra fees for credit checks, bad debt protection or audits. Compare the total, not one fee.
Can I finance just one invoice?
Yes. Selective or single invoice finance lets you choose which invoices to fund, without committing your whole sales ledger. It usually costs more per invoice, but there is often no long contract.
What happens if a customer does not pay?
Under a recourse agreement, the unpaid amount comes back to you. Some facilities offer bad debt protection, which covers you if a customer becomes insolvent, for an extra cost.
Is invoice finance covered by the Growth Guarantee Scheme?
It can be. The Growth Guarantee Scheme covers invoice finance and asset-based lending from £1,000, through accredited lenders. The lender decides whether to use the scheme, and the business stays fully liable for the debt.
Can a new business use invoice finance?
Some providers will fund young businesses, because they rely on the strength of your customers as much as your own history. You will usually need to be invoicing creditworthy business customers already.
Can I charge interest when a customer pays late?
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998 you can claim interest at 8% above the Bank of England reference rate, plus fixed compensation of £40, £70 or £100 depending on the size of the debt.
Is invoice finance better than an overdraft?
It can grow with your sales in a way an overdraft does not, because the limit follows your invoices. But it costs more to run and usually needs a contract. For a short gap, a small business loan or overdraft may be simpler.
Sources
- British Business Bank: Invoice finance guide
- UK Finance: Invoice finance and asset-based lending
- Department for Business and Trade: Large businesses payment practices and performance statistics 2025
- GOV.UK: Late payments crackdown as the Commercial Payments Bill enters Parliament (19 May 2026)
- UK Parliament: Commercial Payments Bill [HL], progress
- legislation.gov.uk: Late Payment of Commercial Debts (Interest) Act 1998
- British Business Bank: Growth Guarantee Scheme FAQs
- FCA register: Halo Corporate Finance Ltd (FRN 726655)
Written by the Compare Advantage team, Chorley. Facts checked against the sources above on 4 November 2026. This page is general information, not financial advice.
Compare Advantage Ltd (FRN 1028452, company no. 14289362) is an Introducer Appointed Representative of Halo Corporate Finance Ltd (FRN 726655). We introduce business finance enquiries to Halo. We are not a lender and do not give financial advice. If you take out finance, the lender may pay commission to Halo Corporate Finance, and Halo may pay us a fee for the introduction. Finance is subject to status and is available to UK businesses only.