Invoice financing is a way for a business to borrow money against the value of its unpaid customer invoices, receiving a large share of each invoice amount as cash up front from a lender rather than waiting for the customer to pay.
General information, not financial, legal, or tax advice. Verify current terms and eligibility with the provider before applying.
How invoice financing works
With invoice financing a business raises money against invoices it has issued but not yet been paid for. The lender advances a percentage of the invoice value, in many cases up to around 80 to 90 percent, and releases the remainder, less a fee, once the customer pays. The business usually keeps responsibility for collecting payment from its customers, and the financing can be arranged invoice by invoice or as a revolving facility against the whole sales ledger. Exact advance rates and fees vary by provider and by the credit quality of the invoices, current as of 26 April 2026.
Invoice financing and factoring
Invoice financing and factoring are related but not the same. With invoice financing the business retains ownership of the invoices and continues to chase payment itself, so customers may not know a lender is involved. With factoring the business sells the invoices to a third party that then collects payment directly from customers. Factoring typically charges a fee based on a percentage of invoice value, while invoice financing is often structured as a loan or line of credit with interest. The right structure depends on cost, control over collections, and whether the business wants the arrangement to stay confidential.
Why it matters to a business
Invoice financing is mainly a cash flow tool. Businesses that invoice on credit terms can wait weeks or months to be paid, which can strain working capital. Releasing cash tied up in receivables can help a business pay suppliers and staff on time and take on new orders. The trade off is cost, since fees and interest reduce the net amount received, and availability depends on the provider assessing the business and its customers. Terms, advance rates, and fees change and vary by provider, so confirm current details before signing up.
Frequently asked questions
What is invoice financing?
How is invoice financing different from factoring?
How much of an invoice can be financed?
Is invoice financing a loan?
Definitions, fees, features, and eligibility change and vary by region. This page was last reviewed on 26 April 2026. Confirm current terms with the provider before applying.