Invoice finance is a popular way to unlock cash tied up in unpaid invoices. Whether you’re looking to boost your cash flow or accelerate your growth plans, invoice finance brokers can help streamline the process of choosing a provider and getting paid. 

In this article, we’ll look at how UK invoice finance brokers work and compare some of the most popular options available for businesses.

What is an invoice finance broker?

An invoice finance broker acts as an intermediary between businesses and invoice finance providers. Their main role is to check your requirements and connect you with the most suitable lender or funding option. Given their wide network of providers, as well as specialist expertise, brokers can offer several advantages compared to going direct, such as:

• Negotiating competitive rates and fees.
• Providing tailored advice on the right option, be it factoring, discounting or selective invoice finance, or other forms of financing.
• Simplifying the application process, saving you time and effort.
• Helping explain and contextualise the products available.

For small businesses or those new to invoice financing, using a broker can ensure you avoid hidden pitfalls and maximise the benefits of the option you choose.

Do I need an invoice finance broker?

While you don’t necessarily need a broker for securing invoice financing, brokers are experts and can make the process easier and ensure you get the right provider for your needs. They understand the market, have access to a wide range of lenders and can save you time and costly mistakes. 

You could reach out directly to invoice finance providers to avoid broker fees, but it’s time-consuming, riskier and lowers your potential for getting the best deals and terms available. So, if you need help, guidance and greater market access, a broker can provide extremely beneficial.

How does invoice financing work?

Invoice financing enables businesses to unlock cash flow without waiting for customers to pay their invoices, with a finance provider advancing up to 95% of the invoice value. The process is straightforward, designed for speed and simplicity.

Here are the typical steps involved in the invoice finance process:

1. Issue an invoice: Your business finishes its service or delivers goods to a customer and raises an invoice.
2. Apply for finance: Your business submits the invoice to a finance provider (once a broker has matched you with a suitable provider).
3. Receive advance: The provider advances a percentage of your invoice value, usually between 70% and 95%, and often within 24 to 48 hours.
4. Customer payment: Your customer pays the invoice directly to the provider (or the business, depending on the type of financing you choose).
5. Final payment: The remaining balance is released to your business, minus the provider's service fees.

The process is designed to work quickly, ensuring that businesses in need of capital can get paid on time. And depending on the type of invoice finance and facility chosen, providers can also handle the back office processes of chasing payment, which we’ll explain in the next section.

What are the main types of invoice finance?

The main types of invoice finance include invoice factoring, invoice discounting, selective invoice finance and spot factoring, which suit varying use cases depending on your business situation.

Invoice factoring

In invoice factoring, the provider purchases your invoices and manages credit control and collections. This type of invoice finance can be great for businesses that want to outsource the legwork of chasing payments and focus on making use of funds.

• Advantages: Fast funding and reduced administrative workload.
• Disadvantages: Customers are usually aware of the factoring arrangement, which may affect relationships.

Invoice discounting

Invoice discounting offers a confidential solution where businesses retain control of their credit management while borrowing against unpaid invoices. The provider advances a percentage of the invoice's value, but customers remain unaware of the arrangement.

• Advantages: Confidential and suitable for larger businesses with established credit control systems.
• Disadvantages: Responsibility for collections remains with your business.

Selective invoice finance

Selective invoice finance allows businesses to choose specific invoices or customers to finance. This offers a bit more flexibility, particularly for companies with changing cash flow needs or those wanting to finance only high-value invoices.

• Advantages: No long-term commitments and more control over financing.
• Disadvantages: May have higher fees compared to traditional factoring or discounting.

Spot factoring

Similar to selective invoice financing, spot factoring enables businesses to fund one-off invoices rather than the entire sales ledger. This is ideal for companies facing occasional cash flow problems.

• Advantages: No ongoing agreements, flexible funding.
• Disadvantages: Typically, more expensive per transaction.

What are the main differences between invoice factoring and discounting?

Most businesses will need to choose between factoring and discounting. Decisions mainly come down to how much control and administration you want to retain. With invoice factoring, finance providers manage credit control and payment collection, saving you time but often making your clients aware that a third party is involved. By contrast, invoice discounting lets you maintain control of collections and keep confidentiality, and you’ll enjoy lower fees as a result.

So, essentially, factoring offers convenience and outsourced credit control, while discounting prioritises discretion and lower costs.

How much does invoice financing cost in the UK?

Invoice financing involves two primary costs: the discount/factor charge (essentially interest charged on the advanced amount) and the provider’s service fees (for administration and credit control, depending on the facility chosen). 

The discount or factor charges usually range from 1.5% to 3% over the Bank of England (BoE) base rate. The service fees vary depending on whether you choose invoice factoring or discounting. You can expect these to be 0.2%–0.5% of turnover with discounting and 0.75% and 2.5% of turnover when using factoring.

You may be subject to several other fees, depending on your chosen invoice finance method and provider, such as:

• Set-up or onboarding fees.
• Auditing/due diligence fees – for assessing your customers’ creditworthiness.
• Penalties for invoices that are unpaid after a certain period.
• Potential annual fees.
• Non-recourse premiums (if you want the provider to take on the risk of non-payment).
• Early exit fees to terminate a financing arrangement. 

How to choose the right invoice finance provider

With several types of invoice financing available and numerous lenders operating in the UK, how do you know which is right for you?

Here are some key things to do and consider before searching for a solution:

• Weigh up the advance % vs. the real cost of borrowing: While the higher advance percentages (such as 95%) can be attractive, it’s important to understand all the fees and costs involved, and how that will work out over time, if you’re looking to use an ongoing invoice finance facility.
• Assess debtor creditworthiness: Unlike most other forms of financing, invoice finance lenders look at your clients’ creditworthiness rather than your own, as that’s where the risk lies. Clients with good ratings and risk profiles can help you get better terms. 
• Decide on confidential vs. disclosed invoice finance: If you want discretion, you’ll need to choose invoice discounting or confidential factoring options, which means your customers won’t be aware of the lending facility you’re using.
• See whether there are sector-specific options: Some lenders specialise in particular sectors, which can simplify the process, give you peace of mind and add operational benefits.
• Onboarding and operational support: Depending on the type of invoice finance you need, it’s worth finding out how easy prospective solutions are to integrate with your accounting software and how much control you can or want to retain over collections. 
• Use an invoice finance broker: Consider using an invoice finance broker to help you find the most suitable and cost-effective options, including support, expertise and access to a wider pool of lenders.

Best invoice finance brokers in the UK: Comparing the options available

Below is an overview of some of the best invoice finance brokers in the UK who can match you with suitable invoice financing facilities and providers to meet your cash flow needs. Take a look.

1. Bespoke Commercial Finance

Bespoke Commercial Finance offers invoice factoring and discounting, plus a range of other lending options. This broker works with multiple lenders (banks, specialist funders), and helps businesses access invoice factoring and discounting, promoting quick decisions and the ability to arrange a finance facility between a week and a couple of months, depending on complexity. 

Key features:

• Access to a large panel of lenders.
• Offer confidential/discreet finance options, where businesses retain management of credit control.
• Set-up fees may apply depending on the deal’s complexity.

Suitable for: Businesses that want a broker to present multiple invoice finance options, especially those looking for speed, discretion and flexibility.

2. Invoice Funding

Invoice Funding is a UK matchmaker for invoice finance providers, offering access to over 40 factoring and discounting providers. They can enable fast cash advances (often within 24 hours, once approved), including for single invoices or ongoing solutions.

Key features:

• Capable of funding single invoices (spot factoring) as well as more extensive lending facilities. 
• Matching businesses with lenders that typically advance up to 90–95%. 
• Confidential options available.

Suitable for: Businesses seeking flexibility and fast access to funds, with options for advancing one-off invoices or lending on an ongoing basis.

3. Pegasus Funding

Pegasus Funding is an independent UK invoice finance broker offering factoring, invoice discounting, selective invoice finance and other business finance services. Their emphasis is on providing a tailored service, leveraging a significant lender network.

Key features:

• Multiple invoice funding types.
• Access to numerous lenders with competitive terms that can align with your funding needs.
• Support for businesses at varying stages of growth with post-funding services. 

Suitable for: Good for businesses that want more customised invoice financing arrangements, especially where cash flow is variable, with the option of selective use and full ledger financing.

4. Hilton-Baird Financial Solutions

Hilton-Baird is an independent commercial finance broker with a long track record working across various sectors, with specialist solutions for invoice finance.

Key features:

• Factoring and discounting solutions, plus bad debt protection.
• Aim to match businesses with funding solutions that advance up to 90% of invoice value. 
• Strong reputation within the invoice finance brokerage space.

Suitable for: Businesses want to use an experienced broker with a strong track record that offers protection against non-payment risk (bad debt protection).

5. Touch Financial

Touch Financial specialises in factoring and discounting across multiple industries, connecting businesses with a wide range of providers, with options for spot financing and CHOCCS (client has control of credit control), which is a hybrid of factoring and discounting.

Key features:

• Offers access to a full spectrum of invoice finance solutions.
• Claims to ensure advances within 48 hours from the point of raising an invoice.
• High trustpilot rating – currently 4.9.
• Handy invoice finance calculator on the Touch Financial invoice finance pages.

Suitable for: Smaller businesses seeking fast access to finance and flexibility in the type of invoice finance solution they want to use.

6. Bolton Business Finance

Bolton Business Finance is an independent broker that arranges various invoice finance types (factoring, discounting, single invoice, selective, etc.) for businesses of various sizes.

Key features:

• Serving a wide client range (£10,000 to £50 million in invoice volume)
• Helping businesses with applications, negotiation and ongoing support. 
• No broker fees are applied to invoice factoring applications. 

Suitable for: Businesses of all types and sizes, particularly those seeking flexibility and additional guidance beyond sourcing a suitable provider.

7. Funding Solutions

Funding Solutions is a broker specialising in invoice finance, asset finance, loans and trade finance, not only advising on what finance format to use but also which lender is best suited to clients’ specific needs.

Key features:

• Matching businesses with suitable factoring and discounting solutions.
• Aims to enable businesses to enjoy advances of up to 90%.
• Almost 20 years of experience and the brainchild of a career banker and a chartered accountant, with unique insights into the challenges SME owners and managers face when seeking funding.

Suitable for: Small and medium-sized businesses looking for a hands-on, independent broker offering impartial advice and vast experience of cash-flow funding. 

8. Cornerstone Commercial Finance

Cornerstone Commercial Finance is a broker that specialises in property funding, plus commercial finance, like business loans, asset finance and invoice finance. The group also provides additional services, including consulting, insurance and money transfer solutions.

Key features:

• Access factoring, discounting and selective invoice finance providers.
• Broker services, plus in-house finance solutions and support.
• Vast financial services network and wide-reaching advisory capabilities.  

Suitable for: Businesses looking for a broker that provides extensive support and invoice finance options, alongside accompanying business finance options. 

9. Clifton Private Finance

Clifton Private Finance is an independent finance broker which has a specialist team for providing invoice factoring, discounting and merchant cash advances.

Key features:

• Access to an exclusive network of invoice finance providers.
• Dedicated client manager support.
• Focused on balancing flexibility with affordability.
• Customises quotes and market-leading rates.

Suitable for: Companies that need hands-on support, guidance and bespoke invoice finance solutions and pricing. 

10. Evangate Financial Solutions

Established over 10 years ago, Evangate Financial Solutions offers a range of financial broker products, including invoice factoring and discounting, with dedicated support.

Key features:

• Invoice finance solutions that advance up to 90% of invoice values.
• Consistent support from a single specialist for continuity.
• No setup charges or hidden fees, plus you can enjoy a 90-day trial period. 
• Services for companies with a turnover of over £50,000. 

Suitable for: SMEs seeking simple invoice finance solutions with clear pricing, no set-up fees and with flexibility to cancel any time within the first few months. 

11. Enness Global

Enness Global is a broker with a large network and over 15 years of experience, focused on arranging high-value invoice factoring and discounting solutions for ambitious businesses.

Key features:

• Focused on getting clients with high-value invoices the best finance rates and terms.
• A network of over 500 lenders across the UK and several other global markets. 
• High Trustpilot rating of 4.9.

Suitable for: Entrepreneurs, business owners and private businesses seeking to borrow significant amounts against their client invoices.

12. Jones & Co Finance

Jones & Co is a broker that offers a range of finance and funding services, including invoice factoring and discounting, with bespoke solutions and a focus on retaining a human touch to brokerage.

Key features:

• Access to boutique and private funders.
• Knowledge from over 25 years of finance history.
• Creative underwriting techniques to help arrange the most suitable finance facilities.

Suitable for: Business owners seeking a human-focused broker relationship with hands-on support and tailored finance solutions.

13. Simply Factoring Brokers

Despite the name, Simply Factoring Brokers also arranges business loans and asset finance, but the firm is particularly focused on invoice factoring solutions – although they can source discounting and selective options.

Key features:

• Independent brokerage with decades of experience.
• Matching businesses with invoice factoring providers that can advance up to 90% of invoice values within 24 hours.
• Credit control and collections can be handled by the brokers’ funding partners.
• Tailored support for companies across any industry.

Suitable for: Those interested in fast and simple invoice factoring solutions, predominantly where the provider removes the hassle of chasing and collecting client payments. 

Invoice finance brokers comparison table

If you want to weigh up the best invoice finance brokers at a glance, check out our handy comparison table, which compares the top brokers across key criteria:

What are the alternatives to invoice finance brokers and providers?

While invoice finance brokers and providers can offer fast access to capital tied up in pending client invoices and tailored accompanying solutions, there are a few drawbacks to consider.

Limitations of invoice finance

• Based purely on your client invoices: Funding is tied directly to your outstanding invoices, and the creditworthiness of your customers heavily influences lender approval and the terms you receive.
• Potentially limited funds: The level of finance available depends on the size and value of your invoices, which may not align with your funding needs.
• Higher costs: Although you can typically access 85–95% of an invoice’s value upfront, with the remaining balance (minus service fees and interest) paid at a later date, the overall cost of borrowing can often be higher than a traditional loan, especially when including any initial set-up fees.
• Perception concerns: Some businesses worry how invoice finance will be viewed by clients, though many industries, especially those impacted by seasonality or with long payment cycles, are well accustomed to these arrangements. Plus, there are confidential options available.

Alternative finance options to consider

• Unsecured business loans: Short-term loans that can plug cash flow gaps, fund new asset purchases or upgrades and support seasonal demand. They provide quick access to funds and flexible repayment terms, without the need for collateral, enabling businesses to handle fluctuating revenue and capitalise on revenue opportunities.
• Merchant cash advances (MCAs): A form of revenue-based funding where loans are repaid as a percentage of future card sales. The facility offers flexibility and scalability, with repayments aligned to performance and seasonal activity, but there are often trading and turnover thresholds.
• Business lines of credit: Flexible lending solutions where you draw down funds up to an agreed limit and only pay interest on what you use. This revolving credit facility is ideal for managing cash flow amid changeable demand and costs in sectors like hospitality, retail or construction.
• Overdrafts: A financial buffer linked to your business bank account, overdrafts provide fast, short-term access to extra funds. They’re quick and easy to use, but usually have higher interest rates than other options.
• Asset finance: A way to spread the cost of key business equipment or vehicles, preserving working capital when you need to acquire essential assets. There are various options, from hire purchase to finance leasing, which come with different levels of flexibility depending on your needs.
• Trade credit: An agreement with suppliers to provide goods in advance without having to pay upfront. You can negotiate longer payment terms to help manage and align cash flow with your receivables and project timelines.  

Using a flexible business loan to manage cash flow

While invoice financing is a good way to access working capital from projects in progress and upcoming payments, as you can see, there are certain limitations and various alternatives to consider. If you want a fast and flexible business finance solution that’s not dependent on client invoices, which offers significant capital without requiring collateral, iwoca’s Flexi-Loans are an ideal option.

Our flexible, unsecured loans offer quick access to funds for managing cash flow, investing in growth or covering unexpected expenses, with customisable borrowing limits and repayment terms.

Benefits of Flexi-Loan solutions include:

• Easy applications and fast access to funds – you can apply online in minutes, with decisions often given within 24 hours.
• Flexible borrowing – get up to £1,000,000 for any business purposes for a matter of days, weeks or as long as 60 months.
• Transparent rates/fees – you’ll know exactly how much you need to repay, with no hidden fees or unexpected costs.
• Control your costs – you can overpay or repay the loan early (free of charge) to save on interest, while you’ll only pay interest on funds you draw.

Whether you need a fast injection of cash or a longer-term solution for managing growth, iwoca offers a pain-free alternative to invoice finance. Find out more about getting a loan from iwoca and check out our business loan calculator.