What Is Invoice Finance and How Does It Work?

Invoice Finance Guide | Hylands Capital

The short answer

Invoice finance lets you borrow against the value of unpaid customer invoices, rather than waiting the usual 30, 60 or 90 days to be paid. A lender advances a percentage of the invoice value, often 80–90%, within 24–48 hours, with the remainder paid (minus a fee) once your customer settles..

Why businesses use it

It solves a specific problem: your business is profitable on paper, but cash is tied up in invoices your customers haven't paid yet. That gap can stop you paying suppliers, wages or taking on new work, even though the money is technically already earned.

Factoring vs invoice discounting

• Invoice factoring: the lender manages credit control and collects payment directly from your customers. Useful if you don't have the resources to chase payment yourself.
• Invoice discounting: you keep control of your own credit control, and your customers are usually unaware finance is involved. Suits businesses with an established finance function.

Is it right for your business?

Invoice finance tends to suit businesses that invoice other businesses (rather than consumers), have reasonably predictable payment terms, and are growing; because the amount you can borrow grows automatically with your sales, unlike a fixed loan. Have questions? Check our FAQ page.

What it costs

Pricing is usually a combination of a service fee (a percentage of turnover financed) and a discount fee (similar to interest, charged on the amount drawn down). Rates vary significantly by lender, sector and risk profile, which is exactly why comparing the market matters.

How Hylands Capital helps

Rather than approaching invoice finance lenders one at a time, we compare options across our panel to find the structure and pricing that fits your business: factoring or discounting, whichever suits how you operate. Visit the Hylands Capital homepage to explore our full range of solutions, or Contact Us to speak with an advisor today.