How invoice finance works
Invoice finance advances most of an invoice's value as soon as you raise it, rather than waiting weeks for payment. Because it's secured against your sales ledger, it focuses on your customers' creditworthiness more than yours. The best option depends on whether you want the lender to manage collections and whether you want it confidential.
1. Invoice factoring
The lender advances funds and manages collections (chasing your customers). Best for smaller businesses that want to outsource credit control — though customers know you're using factoring.
2. Invoice discounting
You get the advance but keep managing collections yourself, usually confidentially. Best for established businesses with their own credit-control function that want funding without customers knowing.
3. Selective invoice finance
Fund individual invoices as needed rather than your whole ledger. Best for businesses wanting flexibility — use it only when cash flow demands, without a whole-ledger commitment.
4. Whole-ledger invoice finance
Finance your entire sales ledger for consistent cash flow. Best for businesses with steady, ongoing invoicing wanting reliable working capital.
Who invoice finance suits
- B2B businesses with creditworthy customers
- Those with long payment terms causing cash-flow gaps
- Growing businesses needing working capital to fund orders
- Businesses wanting funding tied to sales rather than a fixed loan
How to find the best invoice finance
Structures and costs vary widely, so a specialist can match the right type to your business and find competitive terms. Find a business finance specialist through Nesto — free, no obligation.
Frequently asked questions
What is invoice finance?
Funding advanced against your unpaid invoices, giving you most of the value immediately instead of waiting for customers to pay.
What's the difference between factoring and discounting?
With factoring the lender manages collections (and customers know); with discounting you keep collections in-house, usually confidentially.
Is invoice finance based on my credit?
It focuses largely on your customers' creditworthiness and your sales ledger, making it accessible even with weaker business credit.
Can I finance just some invoices?
Yes — selective invoice finance lets you fund individual invoices as needed rather than your whole ledger.
Who is invoice finance best for?
B2B businesses with creditworthy customers and long payment terms that create cash-flow gaps.