Invoice Finance for UK Limited Companies (September 2026)

Quick answer: invoice finance turns unpaid business-to-business invoices into cash now. A lender advances 80% to 90% of each invoice within a day or two and pays the rest, less fees, when your customer settles. It costs a service fee of roughly 0.2% to 3% of turnover plus a discount charge of SONIA plus 1.5% to 7% on what you draw. It beats a loan when the problem is slow-paying customers. This guide, and the pre-check on it, are for UK limited companies and LLPs only. I am an introducer, not a lender or broker, and I have not borrowed from any provider on this page.

I run Glide Marketing, a limited company, and most of what it invoices is on 30-day terms. I have never needed invoice finance, and I am not going to borrow £50,000 to review it. What I have done is read the published terms of the main UK providers, the UK Finance data on the market, and the rules that decide who is allowed to introduce whom. This page is that reading, written for a director with a cash gap.

What invoice finance is

You raise an invoice to another business on credit terms. Instead of waiting 30, 60 or 90 days, you send it to the lender, who advances most of its value. Lloyds Bank's own page puts its advance at up to 90% of invoice value, typically within 24 hours. When your customer pays, the lender releases the balance and takes its fees.

There are two versions, and the difference matters more than the brand:

• Factoring. The lender runs your sales ledger and credit control. Your customers know, because they pay the lender. You get the cash and the chasing done for you.
• Invoice discounting. Confidential. Your customers pay you as normal, you chase as normal, and the lender sits behind the scenes. It is usually cheaper, and usually needs a higher turnover and a tidier ledger.

A third shape, selective or single-invoice finance, lets you fund one invoice at a time with no whole-ledger commitment. It costs more per invoice but has no minimum term, which is why it is often the right answer for a one-off gap.

This is a big, established market. UK Finance says its invoice finance and asset-based lending members provide well over £20 billion to UK businesses at any one time, around £150 billion of finance a year, and that the businesses they supported in 2024 had a combined turnover of over £315 billion.

When it beats a loan, and when it does not

The honest test: if the gap disappears when your customers pay on time, invoice finance is designed for you. If the gap is there regardless of when they pay, it is a loan or asset finance conversation.

What it costs, in real numbers

Every provider prices individually, but the shape is the same everywhere. Two charges:

1. A service fee, charged as a percentage of the invoices you put through the facility (effectively a percentage of turnover). It pays for the lender's administration and, with factoring, the credit control.
2. A discount charge, which is interest on the money you have drawn, priced as a margin over SONIA, the sterling overnight rate that has replaced LIBOR.

The Spark Finance UK Invoice Finance Rate Index, compiled from real facility proposals between June 2024 and June 2026 and last updated June 2026, gives these ranges:

Factoring and discounting are priced similarly on that index, with factoring's service fee slightly higher for the collections work.

Worked example. A company turning over £600,000 a year, all of it B2B on 45-day terms, with a £30,000 gap it keeps hitting. On a standard-SME facility at a 1.2% service fee, the service fee is £7,200 a year. Drawing £30,000 on average at SONIA plus 3.5% costs £1,050 a year in margin, plus whatever SONIA adds: at a SONIA of 4% (an illustration, check the live figure), another £1,200. Call it £9,450 a year, or about 1.6% of turnover, to have the £30,000 permanently available and growing with sales.

Now the parts the headline rate does not show. Set-up fees, annual audit fees, minimum monthly fees when you draw little, and early-termination fees if you leave inside the minimum term. Ask for the total annual cost in writing before comparing anything.

What lenders check

I built the pre-check on this page around the first half of a lender's list, because it is all public.

On the Companies House record:

• Status. Active, and nothing else. A company in liquidation, administration or strike-off proceedings is not a conversation.
• Filing compliance. Accounts and the confirmation statement filed on time. Private companies get 9 months from year end to file accounts (21 months for the first set), and late filing carries an automatic penalty from £150 to £1,500, doubled if it happens two years running. A confirmation statement is due within 14 days of the end of each 12-month review period, and Companies House can strike a company off for not filing one. Lenders read an overdue filing as a live problem.
• The charges register. An existing debenture or floating charge, usually from a bank or another invoice financier, means the new lender needs a waiver or a deed of priority before it can take security over your book debts. That is a delay, not a refusal, but you need to know who holds it.
• Directors. How many, how long they have been there, and whether the board has churned in the last two years.
• Age and sector. Most providers want at least a few months of trading, and the SIC code tells them whether you are a B2B business at all.

Then the things only you can tell them:

• Turnover, and how much of it is invoiced to businesses on credit terms. Bibby Financial Services puts it plainly: you need to be a business that deals with other businesses and raises invoices for payment. Lloyds asks for a minimum turnover of £100,000 a year, that you sell B2B on credit terms, and that you use an accounting package.
• Debtor quality. Who your customers are, how they pay, and whether any one of them is more than about 25% of sales (concentration limits are standard).
• Contract terms. Construction, with its applications for payment, retentions and stage payments, is fundable but narrows the lender list. Long contracts with pay-when-paid clauses are hard.
• The personal guarantee. Expect one. Ask what it covers.

The questions I would ask before signing

1. What is the minimum term, and what is the notice period? Twelve months with three months' notice is common. Selective products have none. This decides how expensive it is to leave.
2. What is the service fee charged on? Gross invoice value including VAT, or net? It changes the number.
3. Is there a minimum monthly fee? If you draw little in a quiet month, you can still pay for a busy one.
4. What are the concentration limits? If one customer is 40% of your sales, will the lender fund all of that customer's invoices, or cap them?
5. Is the facility with recourse? With recourse, if a customer does not pay in a set period, the invoice comes back to you. Bad debt protection can be added for a fee.
6. What is the advance rate on my ledger, not the headline? Up to 90% is a ceiling. Older invoices and weaker debtors get less.
7. What security is taken? A debenture over the company is normal. Ask whether it is a fixed and floating charge over everything, or limited to book debts.
8. What does the personal guarantee cover? All borrowing, or only warranties that the invoices are genuine? Get it in writing.
9. What are the set-up, audit and exit fees? They are real money and rarely in the headline quote.
10. Is the provider a UK Finance member signed up to the Standards Framework? Not a legal requirement, but a useful filter.

Who it suits

• A limited company or LLP selling to other businesses on credit terms, with turnover in the low hundreds of thousands upwards.
• Recruitment, wholesale, manufacturing, haulage, professional services and agencies: sectors where the invoice is clean and the customer is a business.
• A director whose real problem is timing, not profitability.
• A growing company, because the facility grows as the ledger does.

Who it does not suit

• Sole traders and partnerships. Not through this page. Lending to them is regulated, and I hold no FCA permission. An authorised broker is the right door.
• Consumer-facing businesses. Retail, hospitality, salons, trades billing householders. No B2B invoices, nothing to finance.
• Companies with overdue filings or an unresolved strike-off notice. Fix the record first. It is cheaper than any facility.
• A one-off purchase. That is asset finance or a loan.
• Very small, occasional gaps. A business credit card with an interest-free period may cover a £5,000 timing gap for nothing.

What I would look for with a £30,000 gap

Two questions decide it. Is the gap recurring or one-off, and how many invoices make it up?

A one-off gap across two or three large invoices from decent customers points to a selective facility: fund those invoices, pay the fee, no minimum term, walk away. It costs more per invoice than a whole-ledger facility, and that is fine, because you are only using it once.

A gap that comes back every month points to confidential invoice discounting if the ledger is tidy and turnover clears the provider's minimum, or factoring if credit control is the thing you are worst at. On the numbers above, a standard-SME discounting facility on £600,000 of turnover costs in the region of £9,000 to £10,000 a year to keep £30,000 permanently available. Compare that to what the late payments are costing you now: the supplier discounts missed, the overdraft interest, the hours spent chasing.

I am not naming a provider as the pick. No programme is signed with me yet, and naming one before that would be pretending. What I can do is score the company the way a broker would, and hand the case to a lender or broker that fits.

How the introduction works

1. You run the pre-check below. It reads the company's public Companies House record: status, filings, charges, directors, sector. Nothing is stored on this site.
2. It scores the record out of 100 with every factor listed, tells you the two or three things a broker will ask next, and emails me the case.
3. If it is worth taking forward, I come back to you by email with which kind of lender or broker fits and why. You choose whether to be introduced.
4. The lender or broker does the regulated part: the underwriting, the offer, the paperwork. I am not involved in the decision.

How I get paid, and by whom. Introducers are paid by the lender or broker if a facility completes, never by you. As examples of what programmes publish, Nationwide Finance, a direct lender that only offers loans to limited companies, pays introducers up to 8% on every loan, paid on drawdown. Fundably, a commercial finance broker, advertises up to 30% of its commission to affiliates. Those are public terms, not endorsements: as of September 2026 I have not signed with any invoice finance programme, and the table below is deliberately empty of names until I have.

Provider slots (no programme signed, September 2026)

When a programme is signed, its name, its published terms and its status with me go in the relevant row, with the date. Nothing goes in on the strength of a payout alone.

Frequently asked questions

What is invoice finance?

Short-term funding secured on your unpaid B2B invoices. The lender advances most of each invoice's value, typically 80% to 90%, when you raise it, and pays the balance less fees when the customer settles. Factoring includes credit control and is disclosed; invoice discounting is confidential and leaves credit control with you.

How much does invoice finance cost in the UK?

A service fee of roughly 0.2% to 3% of turnover through the facility, plus a discount charge of SONIA plus about 1.5% to 7% a year on what you draw, per the Spark Finance rate index for June 2026. Set-up, audit and exit fees sit on top. Always ask for the total annual cost.

Can a sole trader get invoice finance through this page?

No. Limited companies and LLPs only. Lending to sole traders, partnerships and individuals falls inside the Consumer Credit Act 1974 and needs an FCA-authorised firm, which I am not.

Is invoice finance regulated for a limited company?

Credit to a company or an LLP is not a regulated credit agreement under the Consumer Credit Act 1974. Credit to an individual or a small partnership generally is, unless it exceeds £25,000 and is wholly or predominantly for business purposes (article 60C of the Regulated Activities Order). That distinction is why this page is Ltd-only.

Does invoice finance beat a business loan?

When the gap is caused by payment terms, yes: it scales with sales and you pay only on what you draw. For a one-off purchase, or a consumer-facing business, a loan or asset finance fits better.

What is the minimum turnover?

Provider-specific. Lloyds publishes £100,000 a year. Bibby says providers generally set a threshold and ask for accounts. Selective products go lower. In every case you must sell to other businesses on credit terms.

Will my customers know?

Factoring, yes. Invoice discounting, no.

Do I need a personal guarantee?

Usually. Ask exactly what it covers; the scope varies more than the rate does.

Sources

Every figure above comes from one of these public pages, checked on 11 September 2026.

1. UK Finance, Invoice Finance and Asset-Based Lending: well over £20 billion advanced at any one time, around £150 billion a year, client turnover over £315 billion in 2024, and the Standards Framework.
2. Lloyds Bank, Invoice Finance: advance of up to 90% of invoice value typically within 24 hours; eligibility of selling B2B on credit terms, minimum turnover of £100,000 a year and use of an accounting package; the factoring and discounting definitions; no need to bank with Lloyds.
3. Bibby Financial Services, Do you qualify for invoice finance: the B2B invoicing requirement, provider minimum turnover thresholds, accounts and documentation, 300-plus sectors.
4. Spark Finance, UK Invoice Finance Rate Index: service fee and discount charge ranges by business profile, compiled from facility proposals June 2024 to June 2026, last updated June 2026.
5. The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, article 60C: the exemption for credit exceeding £25,000 entered into wholly or predominantly for business purposes.
6. Blake Morgan, The Business Exemption under the Consumer Credit Act: plain-English reading of article 60C and the position of companies.
7. gov.uk, Accounts and tax returns for private limited companies: first accounts due 21 months after registration, then 9 months after each financial year end.
8. gov.uk, Late filing penalties: £150 to £1,500 for a private company, doubled for two successive late years.
9. gov.uk, Confirmation statement guidance: one statement every 12 months, filed within 14 days of the review period ending, £50 online, and strike-off risk if not filed.
10. Nationwide Finance, Introducers: direct lender, limited companies only, up to 8% commission paid on drawdown.
11. Fundably, Affiliates: up to 30% commission share for affiliates.

If you are a lender or broker and a figure attributed to you is wrong, tell me and it will be corrected the same week, with the change logged on this page.

Mike McDonnell, Founder of Glide Marketing