If long payment terms are tying up your cash, invoice finance can release most of an invoice’s value within a day or two of raising it. We help incorporated UK businesses compare options through Funding Options by Tide’s panel of partner lenders.
The short answer
Invoice finance is a form of business borrowing where a lender advances you a percentage of the value of your unpaid invoices — typically up to around 85–90% — and releases the balance, minus fees, once your customer pays. It converts your sales ledger into available cash without waiting out your payment terms.
It suits businesses that invoice other businesses on credit terms and need cash to flow at the pace they trade, rather than the pace their customers pay.
When you raise an invoice, the lender advances an agreed percentage of its value to your business, usually within one to two working days. Once your customer settles the invoice, the lender releases the remaining balance to you, less their fees.
There are two common structures, and which one suits you depends on how much control you want over collections and how visible you want the arrangement to be to your customers.
Invoice finance tends to fit businesses that sell to other businesses on credit terms — for example wholesalers, recruitment agencies, manufacturers and B2B service firms — where cash is regularly tied up in a sales ledger.
Because the borrowing is secured against invoices you have already raised, the amount available grows as your sales grow. Any rates and advance percentages are indicative and set by the lender following their own checks; they depend on factors such as your customers’ creditworthiness, your sector and your invoicing history.
Rather than approaching lenders one at a time, we pass your details to Funding Options by Tide, a credit broker, who can compare arrangements across their panel of partner lenders and, if suitable, introduce you to one.
Finance is available to incorporated UK businesses and is subject to status, lender checks and formal approval. Funding Options by Tide is a broker, not a lender, and receives a commission from lenders for arranging finance.
All figures shown are indicative only, not a formal offer, and are subject to status, lender checks and formal approval. Actual rates, amounts and terms are set by the lender.
Representative example: for a business loan of £25,000 over 36 months at 8.9% APR (fixed), you would repay 36 monthly instalments of £794. Total amount repayable £28,584. An arrangement fee of £750 is payable and is reflected in the APR. Representative 8.9% APR.
Questions
Once a facility is in place, many lenders advance funds against a new invoice within one to two working days of it being raised. Setting up a facility for the first time takes longer, as the lender must complete its own checks and formal approval.
Lenders commonly advance up to around 85–90% of an invoice’s value, with the remainder released once your customer pays, minus fees. The exact percentage is indicative and set by the lender based on your circumstances.
It depends on the structure. With invoice factoring the lender usually collects payment from your customers directly, so they are aware of it. With confidential invoice discounting you keep control of collections and the arrangement can remain private.
It is a form of business borrowing secured against your unpaid invoices rather than a traditional term loan. Funding Options by Tide is a credit broker and will compare options from their panel of partner lenders; any facility is provided by a lender, subject to status and formal approval.
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