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Invoice finance is a way of raising funds against a business's unpaid invoices. Rather than waiting for customers to pay, the business borrows against the value of its outstanding receivables and receives cash sooner. It is a form of funding tied to the sales ledger, and is most useful for businesses that sell on credit terms and need to bridge the gap between invoicing and being paid.
- What it funds against
- Unpaid invoices — money owed by a business's customers.
- Invoice factoring
- The funder advances against invoices and collects payment from customers.
- Invoice discounting
- The business keeps collecting from its own customers, so the funding can stay confidential.
How invoice finance works
A funder advances a proportion of the value of qualifying invoices up front, with the balance (less charges) paid when the customer settles. The business gets working capital tied to its actual sales, which can flex with the ledger. In factoring, the funder also manages collection; in discounting, the business keeps that in-house and the arrangement can remain undisclosed to customers.
How it differs from a short-term loan
Invoice finance is tied to the sales ledger and scales with it, whereas a short-term business loan is a fixed amount for a fixed need. Invoice finance suits a business with a steady flow of credit sales. A short-term loan is built for a one-off gap. Businesses often use both, for different purposes.
Invoice finance and Credit Corp
Credit Corp provides short-term unsecured business credit — business loans, Credicorp Flex and Credicorp Slice — to UK limited companies and LLPs. We do not provide invoice finance. Where a business's need is specifically about releasing cash from its sales ledger, an invoice-finance provider may be the better-matched option. Credit Corp is an independent UK lender. Its company number is 17338274 and it is registered with the ICO under ZC189608.
See also
- Working capital — what invoice finance helps fund.
- Revolving credit facility — a flexible alternative.
- Asset finance — funding tied to physical assets.
- Business loan — a fixed-amount alternative.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.