If your customers pay in 60 days but your suppliers want payment in 30, the gap sits on your books. Invoice financing exists to close exactly that gap — without waiting, and without new long-term debt.
What invoice financing is
Invoice financing lets you draw most of an invoice’s value as cash shortly after you issue it, instead of waiting out your customer’s payment terms. When the customer pays, the facility is settled and the balance — less fees — comes back to you.
It is working capital secured against money you have already earned. That is what separates it from a term loan: you are not borrowing against the future, you are unlocking the past.
How it works in practice
You deliver the goods or services and issue the invoice as usual. The financier advances a large share of the face value, typically within days. Depending on the structure, either your customer pays the financier directly, or you collect as normal and settle the facility.
The businesses that benefit most are profitable on paper and short of cash in the bank — growth has simply outrun payment terms.
Factoring vs invoice discounting
With factoring, the financier manages collection and your customer usually knows a facility is in place. With invoice discounting, you stay in charge of collections and the arrangement stays confidential. Factoring suits leaner teams; discounting suits businesses that want the relationship untouched.
What it costs
Pricing has two parts: a service or facility fee, and interest on the funds you actually draw for the days you use them. Because the exposure is short-dated and tied to a receivable, it is often cheaper than leaving an overdraft running — but the right comparison is always against your real cost of waiting.
When it fits
- Long payment terms. Your customers are on 30–90 day terms and reliable.
- Seasonal spikes. You need to fund stock or staff ahead of a busy period.
- Growth outpacing cash. New orders keep arriving faster than old invoices are paid.
- No hard assets. You want facilities without pledging property or equipment.
What lenders look at
The quality of your receivables matters more than the age of your business: who your customers are, how they have paid historically, and how clean your paperwork is. Well-documented invoices to established customers are what make an application straightforward.
Cash tied up in invoices?
We’ll assess your receivables and tell you what a facility would realistically look like.
Frequently asked
Only under factoring, where the financier manages collection. With confidential invoice discounting you continue collecting payments yourself and the arrangement is not disclosed.
Once a facility is set up, advances against new invoices are typically available within days of issuing them. The initial setup takes longer as the financier assesses your receivables.
It is a credit facility secured against your receivables rather than a fixed-term loan. The facility rises and falls with your invoicing, so borrowing tracks your actual sales.
