How invoice finance turns waiting into cash
If your customers pay on 30, 60 or 90-day terms, your money is sitting in their accounts while you pay wages and suppliers from yours. Invoice finance lets you draw a share of an unpaid invoice now. When the customer pays, the provider keeps what it advanced plus its fees and passes the rest to you. Done well, it grows with your sales; done badly, it becomes an expensive habit.
This calculator shows the cash released today, the balance you receive when the customer pays, the total fees, and two useful measures: the cost per $100 advanced and the cost per $100 advanced per 30 days. The second lets you compare an invoice facility with a short-term loan or line of credit quote on similar terms.
Factoring and discounting in brief
With factoring, the provider usually takes over collection and your customer pays it directly. With invoice discounting, you keep managing collections and the arrangement can be confidential. Discounting tends to suit larger, well-organised businesses; factoring can suit smaller ones that want help chasing payments. Our invoice finance review covers the pros and cons in detail.
Questions to ask before you sign
- Is the facility for selected invoices or your whole ledger, and is there a minimum monthly fee?
- What happens if a customer pays late or not at all? Is it recourse or non-recourse?
- How long is the contract and what does it cost to leave early?
- Which customers or invoice types are excluded?
If slow-paying customers are squeezing your cash flow and you want to know what fits, make one enquiry. There is no credit check when you first enquire, a real person reads it and your details go to one lending partner rather than a crowd. Tell us your typical invoice size and payment terms in the enquiry form so the conversation starts in the right place.
Frequently asked questions
How much of an invoice can I get up front?
It depends on the provider, your customers and the type of facility. The advance is a percentage of the invoice value, with the rest (less fees) paid when your customer pays. Enter the percentage you have been offered to see the cash it releases.
What fees does invoice finance charge?
Common charges include a service or administration fee, a discount or finance charge on the money advanced for the time it is outstanding, and sometimes setup or minimum monthly fees. Ask for every fee in writing and enter the total you expect for this invoice.
Is invoice finance cheaper than a loan?
Sometimes, but it depends on how quickly your customers pay and how fees are structured. Cost per hundred dollars advanced, shown in this calculator, lets you compare it with a short-term loan or line of credit quote.
Will my customer know?
With factoring, the provider usually collects from your customer, so they will know. With confidential invoice discounting, you usually keep collecting and the arrangement is not disclosed. Ask which applies to your offer.
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