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Cash flow is the lifeblood of any business. Even with strong sales, delayed customer payments can create significant strain on day-to-day operations. For businesses that invoice clients, one of the most effective ways to manage this challenge is through invoice finance.
Invoice finance allows businesses to release cash tied up in unpaid invoices, providing faster access to working capital without waiting for customers to settle their accounts. It’s a flexible funding solution that supports growth, smooths over cash flow gaps, and strengthens financial resilience.
Invoice finance is a form of borrowing against your business’s accounts receivable (invoices). Rather than waiting 30, 60, or even 90 days for payment, you can receive a large percentage of the invoice value, often up to 90%, within 24 to 48 hours of issuing the invoice.
This allows you to use the funds immediately to pay suppliers, invest in operations, cover wages, or take on new projects, all while maintaining healthy cash flow.
There are two main types of invoice finance:
Invoice Factoring – The lender manages your sales ledger and collects payments from customers on your behalf.
Invoice Discounting – You retain control of your customer relationships and collections, while the lender provides funds against the invoice value.
Both methods offer fast access to cash and can be tailored to suit different operational needs.
The process of invoice finance is relatively simple:
You deliver goods/services and issue an invoice to your customer.
The finance provider advances up to 90% of the invoice value, usually within 24-48 hours.
The customer pays the invoice according to the agreed terms (e.g., 30 days).
Once paid, the lender releases the remaining balance, minus their service fees or interest charges.
This cycle can be repeated for every new invoice issued, creating a revolving line of credit linked to your sales ledger.
The most immediate benefit of invoice finance is enhanced liquidity. Instead of waiting for customer payments, you can access funds quickly, helping you meet obligations and grow your business without delay.
Unlike fixed-term loans, invoice finance grows with your business. As your sales increase, your available funding increases too, making it ideal for scaling companies or those with seasonal trading patterns.
Invoice finance is typically unsecured beyond the invoice itself. This means you don’t have to pledge property, machinery, or other physical assets as collateral.
Unlike raising capital through equity investment, invoice finance allows you to retain 100% ownership and control of your business, without diluting shares or bringing in external investors.
If you opt for invoice factoring, many providers offer credit control services, chasing and collecting payments from customers. Some also provide bad debt protection, shielding you from non-payment risks.
Invoice finance works best for businesses that sell to other businesses (B2B) on credit terms, especially those issuing large volumes of invoices or dealing with long payment cycles.
It is particularly effective for:
Manufacturing and wholesale businesses with significant input costs
Recruitment agencies with weekly wage commitments
Transport and logistics firms with rolling contracts
Creative agencies and consultancies with high project turnover
Any business with a strong debtor book but limited working capital
| Feature | Invoice Finance | Asset-Based Lending | Bank Overdraft / Loan |
|---|---|---|---|
| Security Required | Invoices (Receivables) | Equipment, property, inventory | Often secured with assets or guarantees |
| Speed of Access | Fast (24–48 hours) | Moderate | Slower due to stricter criteria |
| Borrowing Limit | Scales with sales | Fixed by asset value | Fixed limit |
| Credit Requirements | More flexible | Based on asset value | Often requires strong credit history |
| Control of Collections | Optional (Factoring) | Business retains control | Business retains control |
While invoice finance can be a valuable tool, it’s important to consider the following:
Service fees typically range from 1–3% of invoice value, plus interest on advanced funds. Be sure to factor this into your margins when evaluating the benefits.
With factoring, your customers will know a third party is managing the invoice. Some businesses prefer discounting to retain customer relationships privately.
Lenders typically prefer to fund commercial invoices (B2B), issued to creditworthy customers. A strong sales ledger and prompt-paying clients increase your chances of approval and better rates.
Some agreements require a minimum usage period or turnover volume. Make sure the contract structure matches your business’s expected growth and cash flow cycle.
At P10 Financial, we help businesses of all sizes improve liquidity through smart, tailored funding strategies. If invoice finance is right for you, we’ll match you with a competitive provider and structure a facility that:
Improves working capital without affecting business ownership
Aligns with your sales cycle and credit terms
Offers transparent, competitive rates with minimal friction
Whether you’re a growing company in need of flexible funding or simply looking to unlock cash from your existing invoices, our team will guide you through every step, from selecting a provider to integrating the facility into your operations.
If late payments or extended credit terms are holding your business back, invoice finance could be the key to unlocking growth.
Get in touch with P10 Financial today to explore how invoice financing can transform your cash flow, and put your sales ledger to work for your business.
