Invoice finance - unlock cash tied in invoices
Waiting 30 to 90 days for customers to pay invoices can put real pressure on your cash flow. Invoice finance helps your business release money tied up in unpaid invoices so you can cover costs, pay staff and invest in growth.
Funding Options by Tide works with more than 85 UK lenders and has helped over 17,000 businesses secure more than £1bn in funding. Whether you need short-term support or a long-term cash flow solution, we can help you compare invoice finance options in minutes.
What is invoice finance and how it works
What is invoice finance?
Invoice finance is a type of business funding that lets you borrow money against the value of your unpaid invoices. Instead of waiting for your customers to settle their bills, you receive an advance from a finance provider.
It can be a flexible way to improve working capital, especially for small businesses with long payment terms. There are two main forms: invoice factoring and invoice discounting.
Invoice factoring means the lender manages your sales ledger and collects payments directly from your customers.
Invoice discounting allows you to stay in control of collections while receiving an advance against your invoices.
How does invoice finance work?
The process is straightforward:
You raise an invoice for goods or services provided.
The invoice finance company advances you up to 90% of the invoice value, usually within 24 to 48 hours.
When the customer pays, you receive the balance minus fees.
This means you don’t have to wait weeks or months for payment, helping you cover day-to-day expenses or invest in growth opportunities.
The different types of invoice finance
Selective invoice finance
Also known as spot factoring, rather than selling your entire ledger, or securing funding for all invoices as they’re raised, selective invoice finance enables you to choose the clients whose invoices you’d like to gain funding for on a case by case basis.
Invoice discounting
Of the invoice finance types, invoice discounting grants you greater control over your relationships. You continue to manage collections. Customers may not know about the arrangement, offering more confidentiality.
Invoice factoring
Invoice factoring involves selling your invoices to a factoring company. The provider manages your debtor book, collects payments and advances funds to you. This can save time but means customers know you’re using invoice finance.
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How does Funding Options work?
Tell us how much you need
We’ll ask a few questions about your business and the reason for your loan.
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Why choose Funding Options by Tide?
Funding Options by Tide helps UK SMEs find fast, tailored business finance by connecting them with over 80 trusted lenders. Backed by Tide and FCA-regulated, the service is free and easy to use.
Compare 80+ UK lenders in minutes
We scan the market so you don’t have to, finding the right option for your business.
Trusted by 17,000+ UK businesses
From startups to established SMEs, we’ve already helped secure over £1bn in funding.
FCA-regulated and Tide-backed
We operate as a credit broker, not a lender, giving impartial access to multiple finance products.
Excellent customer experience
Our Trustpilot rating is 4.8 out of 5, based on 1,300+ independent reviews.
Personalised support
Our team can guide you through the process and help you choose the finance that fits your needs.
Is invoice finance right for my business?
Invoice finance is often used by businesses that:
Sell on credit terms of 30, 60 or 90 days
Experience late payments from clients
Need to smooth out seasonal cash flow fluctuations
Operate in sectors such as recruitment, wholesale, logistics and manufacturing
For example, a UK recruitment agency used invoice finance to unlock £120,000 tied up in unpaid invoices, helping them meet payroll on time and win new contracts.
Alternatives to invoice finance
Invoice finance is not the only way to improve cash flow. Other options include:
Business loans for longer-term funding needs
Revolving credit facilities for flexible, on-demand borrowing
Merchant cash advances based on card sales
Our platform lets you compare these alternatives alongside invoice finance to find the best fit for your business.
Pros and cons of invoice finance
Pros and cons of invoice finance
Pros | Cons |
Improves cash flow quickly | Fees can add up |
Flexible - funding grows with sales | Not all invoices qualify |
Can reduce stress of late payments | Customers may know if using factoring |
Helps cover payroll and supplier costs | May affect profit margins |
Can free up management time (factoring) | Less control if provider manages collections |
How to apply for invoice finance
With Funding Options by Tide, it’s simple to explore your choices:
1. Tell us about your business and funding needs.
2. Compare offers from our panel of over 85 UK lenders.
3. Choose the option that suits you best and apply directly.
You could receive funding within 24 to 48 hours, helping you bridge gaps and keep your business moving.
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
Monthly payments
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Monthly interest
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Total interest
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Length of loan
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Learn more about invoice finance
What is the difference between invoice factoring and invoice discounting?
Invoice factoring means the finance provider manages your sales ledger and collects payments from your customers directly. Invoice discounting lets you keep control of collections, while the provider advances funds against your invoices.
How quickly can I get invoice finance?
Many lenders release funds within 24 to 48 hours after invoices are verified. With Funding Options by Tide you can compare providers and get offers in minutes.
Do I have to finance all of my invoices?
Not always. Some lenders offer selective or spot invoice finance, which allows you to raise money against specific invoices rather than your entire sales ledger.
Will my customers know I am using invoice finance?
It depends on the type. With invoice factoring your customers pay the finance provider directly, so they are aware. With invoice discounting, you remain responsible for collections, so your customers may not know.
What are the typical fees for invoice finance?
Fees usually include a service charge (a percentage of invoice value) plus interest on the funds advanced. Costs vary depending on your turnover, industry and the type of facility you choose.
Is invoice finance suitable for small businesses?
Yes - invoice finance is often used by SMEs to smooth out cash flow, especially in industries with long payment terms like recruitment, wholesale and manufacturing.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.