A Quick Guide to Invoice Finance
Invoice finance is the ideal solution for businesses looking to improve immediate cash flow without disrupting operations. It allows business owners to unlock cash tied up in unpaid invoices. Unlike traditional working capital solutions such as a bank overdraft, invoice finance supports business growth—helping you reach your targets without financial strain.
Below, we explain what invoice finance is, how it works, and the benefits of using it in your business.
What is invoice finance?
Invoice finance enables a business to improve its cash flow by releasing money tied up in invoices. Instead of waiting for customers to pay, risking cash flow disruptions or missed payments, invoice finance offers a proactive funding approach. Businesses can typically access up to 90% of the invoice value in just a few days.
Invoice Finance: Quick Facts
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Invoice finance can unlock 80% to 90% of unpaid invoice value in as little as 24 hours (sometimes even faster).
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There are two types of invoice finance: invoice factoring and invoice discounting.
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You can choose to collect payments yourself and repay the lender, or the lender can take over your sales ledger and collect directly from your customers.
How does invoice finance work?
There are two types of invoice finance, and your chosen option will affect how the process works:
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Invoice factoring: The finance provider purchases your invoices and collects payments from customers directly.
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Invoice discounting: You retain control of the sales ledger and customer communications, using the invoices as security for funding.
The process:
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You provide goods or services and invoice your customer.
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These invoices are submitted to your chosen invoice finance provider.
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The lender advances a percentage of the invoice value—usually 80% to 90%- within 24 to 48 hours.
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Depending on whether you’ve chosen factoring or discounting, either the lender collects payment or you do.
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Once your customer pays the invoice, the balance is transferred to you, minus fees.
How quickly can I get funds with invoice finance?
At White Oak UK, our process begins with a conversation about your requirements. We’ll then propose a tailored funding solution, outline any fees, and conduct a debtor survey to assess your sales ledger. From there, we enter underwriting to confirm the credit facility and funding offer.
Advantages and disadvantages of invoice finance
| Advantages | Disadvantages |
|---|---|
| Quick access to cash | Invoice finance involves service and interest fees |
| No major assets needed—the invoices act as security | With factoring, your customers will know you’re borrowing |
| Option for the lender to manage payment collections | Some providers may require a minimum contract term |
| Keep control of collections with invoice discounting | You may remain liable if customers fail to pay, depending on terms |
| Flexible and scalable |
Do I have to pay fees on invoice finance?
Yes. Costs vary by lender, but typically include:
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A service fee (as a percentage of the invoice value)
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An interest fee, often slightly above the Bank of England base rate
Other cost factors include:
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Business turnover
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Your clients’ creditworthiness
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Invoice volume and value
Am I eligible for invoice finance?
White Oak UK’s eligibility criteria include:
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A minimum turnover of £1,000,000
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3+ years of trading history
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UK Limited Company status
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A proven track record of operational financial systems and reporting
Find out if you’re eligible for invoice finance with White Oak UK
At White Oak UK, we offer a range of funding solutions tailored to your business. We’ll guide you through every step, recommend the right product, and aim to deliver a decision on the same day.
To explore your invoice finance options, get in touch with us today
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