Recognition
Cash is sitting in invoices you've already sent
You've done the work, raised the invoice, and now you're waiting 30, 60, sometimes 90 days for a customer who's perfectly good for the money to actually pay it. That's not a credit problem. It's a timing problem, and it's the specific gap invoice finance exists to close.
Why it happens
Trade terms are set by the buyer, not you
Established customers, particularly larger ones, set their own payment terms, and an established supplier rarely has the leverage to shorten them. The result is a structural gap between doing the work and being paid for it that has nothing to do with how well the business is run.
Where this fits
The "releasing working capital" situation
This is the facility for one specific situation: value that's real and already yours, just not liquid yet. If the gap is before an invoice exists at all, rather than after, this isn't the right page: see Credit Lines instead.
Specialist insight
What actually happens when you raise an invoice
You invoice as normal. A lender advances most of its value, usually within a day or two, against your customer's payment history rather than yours alone. When your customer pays, on their normal terms, the lender releases what's left, minus their fee. You're not borrowing a lump sum against the business. You're unlocking cash that's already yours, sitting in someone else's payment run.
Confidential, disclosed or selective: not the same choice for everyone
Confidential invoice discounting means your customer never knows a lender's involved: you still collect payment yourself, and the facility stays behind the scenes. Factoring is the disclosed version: the lender collects directly, which usually costs more because it bundles a real credit-control service. Selective invoice finance is different again: you choose which invoices, or which customers, to finance, rather than committing your whole sales ledger.
We've seen this play out differently than the label suggests: when a facility feels tighter than it used to, the cause is more often disputes than late payers. A lender advancing against your ledger discounts anything under query (short-shipped goods, a pricing disagreement, a missing PO number) because they can't tell yet if it'll be paid. Tidying up how disputes get logged and resolved often unlocks more headroom than negotiating the facility itself.
Decision helper
Who this fits
- You invoice other businesses, not consumers, on standard trade terms.
- Your customers pay reliably, just slowly.
- You want cash flow that tracks work done, not a fixed loan amount.
Alternatives and limitations
If you've won a contract but haven't reached the point of raising an invoice yet, there's nothing here to lend against. That's a genuinely different funding gap, usually filled by a working-capital facility built for the mobilisation period. And if you already have invoice finance in place and it's the arrangement itself that's too tight, not the underlying need, the fix is usually a facility review, not a second invoice-finance product. If a debenture is part of what's holding it back, see borrowing with an existing debenture.
Not sure this is the right facility?
Start from the mismatch, not the product
If the business is viable and the shortfall keeps recurring, the useful question is which stage of the cash cycle the money is trapped at, because that decides the facility. See facility mismatch.
