Invoice finance process

How invoice finance is set up

Invoice finance facilities take longer to set up than they do to run day-to-day, because the funder needs to understand your customer base, credit control practices and sales ledger before agreeing terms. Once live, drawdowns against new invoices are usually same-day or next-day.

Category: How it works

Product: Invoice Finance

Typical setup time: 2–4 weeks
Advance rate typically offered: 70-90% of invoice value
Common structures: Factoring, invoice discounting, selective
Ongoing drawdown speed: Same or next working day

Initial due diligence

The funder reviews your debtor book — who your customers are, how concentrated the ledger is, and average payment terms — alongside your accounts and management information. A ledger with a handful of large debtors is assessed very differently to one spread across dozens of smaller customers.

Facility structuring and terms

Based on that review, the funder proposes an advance rate, service fee and discount charge, and decides whether factoring (with credit control support) or invoice discounting (confidential, self-managed) fits the business better.

Advance rate agreed per invoice
Service fee covering ledger administration
Discount charge, similar to an interest rate
Concentration limits on individual debtors

Legal agreement and initial audit

Before the facility goes live, the funder typically conducts a pre-completion audit — reviewing sample invoices, contracts and delivery evidence — to confirm the ledger is genuine and collectable. This audit is standard practice, not a sign of distrust.

First drawdown and ongoing operation

Once live, new invoices are uploaded or notified and funds released against the agreed advance rate, usually within a day. Periodic reviews and occasional audits continue throughout the life of the facility to keep the funder's risk assessment current.

Frequently asked

How long does it take to get invoice finance running?

Typically two to four weeks from application to first drawdown, though simple facilities with an established funder relationship can move faster.

Will my customers know I'm using invoice finance?

With factoring, usually yes, since the funder manages collections. With confidential invoice discounting, your customers continue paying you directly and are unaware of the arrangement.

What percentage of an invoice can I draw down?

Typically 70-90% upfront, with the balance (less fees) released once the customer pays in full.

Can a new business get invoice finance?

Yes, though funders will look closely at the debtor book and may set a lower advance rate or tighter concentration limits until a trading track record builds.

What happens if a customer doesn't pay?

With non-recourse facilities the funder absorbs approved bad debts; with recourse facilities the unpaid amount is charged back to you, so it's worth clarifying which structure you're being offered.

Set up an invoice finance facility

Tell us about your debtor book and turnover and we'll identify funders likely to offer competitive terms.

Call 0345 2690628 Send your deal details