What is invoice finance?
Invoice finance is a facility linked to eligible invoices raised by one business against another. Instead of waiting for customers to reach the end of their payment terms, the business may access an agreed proportion of the invoice value earlier.
When the customer pays into the designated account, the retained balance is released after the provider deducts the agreed charges. The precise advance rate, controls, conditions and costs depend on the provider and the quality of the sales ledger.
Shadowfax Funding Solutions compares suitable invoice finance structures across its lender panel and explains the commercial detail before you proceed.
Types of invoice finance
Invoice Factoring
Funding is combined with credit-control and collections support. This may suit businesses that want additional help managing the sales ledger.
Invoice Discounting
The business normally retains responsibility for credit control and collections. Confidential structures may be available to eligible applicants.
Selective Invoice Finance
Where available, selected invoices or customer accounts can be funded rather than committing the whole sales ledger.
Recruitment Finance
Specialist facilities can help recruitment companies fund payroll while end clients settle invoices on longer terms.
Who can use invoice finance?
Business-to-business trading
The facility is primarily designed for companies supplying goods or services to other businesses on agreed credit terms.
Verifiable invoices
Invoices should relate to completed work or delivered goods and be capable of verification under the provider's process.
A suitable debtor book
Providers assess customer quality, concentration, disputes, credit notes, payment terms and the way the ledger is managed.
How invoice finance can release working capital
A business raises an eligible invoice for £20,000 and needs working capital before the customer reaches the payment date.
On these assumptions, up to £17,000 could become available after the invoice is funded. When the customer pays, the retained balance would be released after agreed charges and any other adjustments.
Important: This is an illustration, not a quotation. Actual availability and charges depend on the proposal and provider.
What to weigh up before proceeding
Potential advantages
Earlier access to receivables, funding that can respond to eligible turnover, and optional support with credit control.
Commercial considerations
Service fees, discount charges, minimum commitments, concentration limits, contract length and notice periods should be compared.
Operational fit
The provider's controls, reporting, verification and collections approach need to work with the way the business trades.
How Shadowfax approaches an invoice finance review
Conversation
We discuss the business, customers, payment terms and funding objective.
Ledger review
We consider turnover, debtor ageing, concentration, credit notes and existing borrowing.
Market comparison
We identify providers whose structure and appetite may suit the proposal.
Commercial explanation
We explain availability, charges, conditions, controls and how we are paid.
Completion support
We help coordinate information, due diligence and documentation.
Compare invoice finance with other options
Invoice Finance FAQs
What is invoice finance?
Invoice finance is a working-capital facility linked to eligible business-to-business invoices. A provider may make an agreed proportion available before the customer pays.
What is the difference between factoring and invoice discounting?
Factoring normally combines funding with credit-control and collections support. Invoice discounting usually leaves the business responsible for managing the sales ledger and collecting payments.
Can customers be unaware of the facility?
Confidential invoice discounting may be available to eligible businesses. Factoring is more commonly disclosed because the provider is involved in collections.
Can a new or growing company apply?
Potentially. Providers may consider the quality of the sales ledger, customers, management, trading model and funding requirement as well as the age of the business.
Can invoice finance support recruitment companies?
Yes, specialist recruitment finance may help fund weekly or monthly payroll while clients pay invoices on longer terms, subject to provider criteria.
Can a business switch invoice finance provider?
Yes, subject to the existing agreement and approval by the replacement provider. A review can compare availability, service, concentration limits, charges and contractual terms.
How much funding could be available?
Availability depends on eligible invoices, advance rates, customer concentration, disputes, credit notes, terms of trade and provider criteria.
How is Shadowfax Funding Solutions paid?
Any broker fees and lender commission arrangements will be explained before you proceed.
Discuss your invoice finance requirement
Whether you are considering invoice finance for the first time or reviewing an existing facility, we can help you compare the structure, service, availability and overall commercial fit.
Funding is subject to status, lender criteria, due diligence and final approval. Shadowfax Funding Solutions Limited acts as a commercial finance broker, not a lender. Terms, availability and charges vary by provider and proposal.