Invoice Finance

Invoice Finance, be it Factoring, Confidential Invoice Finance or Single Invoice Finance can be an effective way of releasing cash locked up in unpaid invoices.

The market is constantly evolving and the choice of providers and options can be bewildering. Let Partner guide you and advise on the most suitable solution for your business.

Love it or hate it – most business owners have a view on Invoice Finance. However, a properly structured facility can be one of the most effective methods of working capital finance.

When considering which Invoice Finance provider is right for you we consider 4 key factors:

  • How much cash will the facility really generate?
  • Do you need to factor your whole debtor book or is a Selective Invoice Finance agreement more appropriate?
  • The level of interaction you require with the lender on a day to day basis.
  • Cost.

Although most Invoice Finance lenders will claim to fund 85% – 90% of your debtor book, the reality can be somewhat different depending on factors such as credit limits of your customers and how much business you do with any one customer (“concentration”).

We work closely with you to find out the individual requirements of your business so we can advise on the most appropriate solution. As with all things in life, sometimes the cheapest option is not the most cost-effective.

We liken Invoice Finance agreements to mobile phone contracts. For regular users a longer term Factoring or Confidential Invoice Finance contract will probably be the most cost-effective solution. However if you only need to raise finance against the occasional invoice then Selective Invoice Finance (the “pay as you go” alternative) could be for you.

For the uninitiated, here is a whistle-stop guide to the various types of Invoice Finance.


You effectively sell your invoices to a lender who will advance you up to 90% of the gross value of the invoice immediately.

The lender undertakes all credit control activities, freeing up your time.

When the invoice is paid you receive the remaining 10%, less a Service Fee which is usually a percentage of the invoice value and interest (“discount charge”) which is charged on the amount that you have actually borrowed.

Factoring is usually “disclosed”, this means that the lender’s details are on the invoice and your customers pay the lender directly.

Confidential Invoice Discounting

As with Factoring, you can raise up to 90% of the gross value of an invoice, usually on the day of issue.

However with CID, your business remains in charge of day to day invoice and credit-control processes and your customers are usually completely unaware that you are financing your invoices.

The remaining 10% will be made available to you when it is collected, once again less charges.

CID is suitable for established businesses with good internal credit control procedures.

Selective Invoice Finance

If you only need to occasionally release cash from your invoices then Selective Invoice Finance, also known as Spot Factoring could be for you.

Both Factoring and CID require you to finance all of your invoices. Selective Invoice Finance allows you to choose which invoices you finance on a “pay as you go” basis, keeping costs down and reducing administration.

Selective Invoice Finance is a real growth area for the Invoice Finance sector, with new entrants joining the market by the month. There are also a number of “Peer to Peer” online invoice auction platforms that enable investors to “bid” to finance your invoices.

The above is only a snapshot of the alternatives available. At Partner Commercial we are constantly staying in touch with market developments to ensure that you receive the best advice for your business’s individual working capital funding needs.