An invoice finance facility is an ongoing arrangement that allows a business to receive most of the money from its customer invoices before those customers pay.
Here is a simple example. You complete £10,000 of work and give your customer 30 days to pay. Instead of waiting a month for the money, an invoice finance provider could pay you up to £9,000 shortly after you raise the invoice. Your customer still pays the full £10,000 on their normal date. You then receive the remaining balance, minus the provider’s fee.
The word ‘facility’ simply means the arrangement stays in place. You can use it again when you raise future invoices, up to an agreed limit. It is not just a one-off payment against one invoice.
In short:
You complete the work → raise the invoice → receive most of the money within 24 hours → your customer pays on their normal terms → you receive the balance, minus the fee.
Why do businesses use invoice finance?
Many businesses pay wages, suppliers, fuel, materials and other costs long before their customers settle their invoices.
A construction subcontractor might pay its workforce every week but wait 30 to 45 days for a main contractor to pay. A recruitment agency might pay temporary workers weekly while its clients pay monthly. The business can be profitable and have plenty of work, but still be short of money at the wrong time.
Invoice finance helps close that timing gap. It gives the business earlier access to money from work it has already completed, without asking the customer to pay sooner.
How does an invoice finance facility work?
The process usually works like this:
- You complete the work. You supply goods or services to another business.
- You raise your invoice. Your customer keeps its normal payment terms, such as 30, 45 or 60 days.
- You send the invoice details to the finance provider. The provider checks that the invoice meets the conditions agreed when your facility was set up.
- Most of the invoice value becomes available. With Apollo invoice finance, this can be up to 90% within 24 hours.
- Your customer pays. Payment is made into the account set up for the facility.
- You receive the rest. The remaining balance becomes available, minus the agreed fee.
You can repeat this process with new invoices. You do not need to make a fresh finance application every time you complete a job or make a sale.
What does the facility limit mean?
The facility limit is the maximum amount of funding that can be in use at one time. It is a ceiling, not a lump sum that automatically arrives in your bank account.
For example, you might have a £100,000 facility but currently hold £40,000 of approved unpaid invoices. If your facility makes 90% available, you could access up to £36,000 against those invoices.
As customers pay and you raise new invoices, the amount available changes. If your sales grow, the facility can provide more funding within the agreed limit. The limit can also be reviewed if your business outgrows it.
Is invoice finance the same as a business loan?
No. A business loan normally provides a fixed amount which is repaid over an agreed period. An invoice finance facility is based on the value of your approved unpaid invoices.
This means the funding can move with your sales. Raise more approved invoices and more can become available, up to the facility limit. If the value of your unpaid invoices falls, the amount available will fall too.
Invoice finance does not give your business extra sales or profit. It changes when you can use the money from sales you have already made.
What types of invoice finance facility are available?
The main difference between the various types is who manages credit control and collects payment.
- Invoice factoring: Apollo provides funding against your invoices and can manage credit control and collect payment on your behalf.
- CHOCCs: You receive funding against your invoices but continue managing credit control and collecting customer payments yourself.
- Invoice discounting: Your business manages collections and the facility is often confidential. Invoice discounting is available from some providers, but Apollo does not offer it.
With full invoice factoring, the provider can chase outstanding invoices on your behalf. This can save time as well as providing funding.
CHOCCs stands for Client Handles Own Credit Control. You receive the funding but continue to manage customer payments yourself.
Invoice discounting is another option available in the wider market. It is often confidential and generally suits more established businesses with suitable financial systems and credit control procedures.
Some providers also offer selective or single-invoice finance if a business only wants to fund particular invoices.
How much does invoice finance cost?
The price depends on factors such as your turnover, sector, customers, invoice values and how much funding you use.
The cost is commonly shown in two parts:
- A service fee for running the facility and any credit control support included
- A discount charge based on how much funding you use and how long you use it for
Apollo can show these separately or combine them into one bundled fee. Either way, you should receive a clear breakdown before signing so you know what you will pay and what you will receive.
Some businesses also add bad debt protection to their facility. This can provide cover if an included customer becomes insolvent and cannot pay, subject to the terms of the policy.
Who can use an invoice finance facility?
Invoice finance is usually designed for businesses that:
- Sell goods or services to other businesses
- Raise invoices after completing the work or supplying the goods
- Give customers time to pay
- Regularly wait weeks or months for payment
- Want earlier access to that money to meet costs or take on more work
It is commonly used in construction, recruitment, transport and logistics, manufacturing, wholesale and other business-to-business sectors.
The provider will look at your business, its invoices and the customers responsible for paying them. Being a new business or having previous credit problems, CCJs or HMRC arrears does not automatically rule you out. Apollo considers viable UK businesses that may have been turned down elsewhere, including businesses turning over roughly £20,000 to £250,000 a month.
Invoice finance is less likely to suit a business that mainly sells directly to consumers, takes payment at the point of sale or does not offer credit terms.
What are the benefits?
An invoice finance facility can help a business:
- Pay wages and suppliers without waiting for customers
- Start new jobs or contracts sooner
- Take on more work without creating an unmanageable payment gap
- Access more funding as approved sales grow
- Plan its cash flow with greater confidence
- Hand over credit control, if that service is included
The important distinction is that your customer does not actually pay any sooner. The facility gives your business earlier access to most of the invoice value while you wait.
What should you check before agreeing to a facility?
Before choosing a provider, make sure you understand:
- How much of each invoice you can access
- Which invoices and customers can be funded
- The overall facility limit
- The full cost and any minimum charges
- Who will handle credit control
- Whether customers will know about the facility
- What happens if an invoice is disputed or not paid
- The minimum term and notice period
- Whether bad debt protection is included or optional
The cheapest headline rate is not always the best option. The facility also needs to provide enough usable funding, fit the way your business invoices and come with support you can rely on when something changes.
Frequently asked questions
Does invoice finance make my customer pay sooner?
No. Your customer keeps its normal payment terms. The finance provider makes most of the invoice value available to your business while you wait.
How quickly can I access the money?
Once your facility has been set up, Apollo can make up to 90% of an approved invoice available within 24 hours. Setting up the facility itself involves checks on the business, its customers and its invoices.
Will my customers know I use invoice finance?
It depends on the type of facility. Apollo provides disclosed facilities, so customers know invoice finance is in place. Some invoice discounting facilities available elsewhere are confidential.
Can a new business use invoice finance?
Potentially, yes. The provider looks closely at the invoices and the customers expected to pay them, so a limited trading history does not always prevent a new business from qualifying.
What happens if a customer does not pay?
This depends on the agreement. Without bad debt protection, your business may remain responsible for the unpaid amount. If an included customer becomes insolvent, bad debt protection may cover an agreed share of the loss. The provider should explain exactly what is and is not covered before you sign.
Could an invoice finance facility work for your business?
You do not need to know which type of facility you need before speaking to us. Tell us how your business invoices, how long your customers take to pay and what that wait is stopping you from doing.
One of Apollo’s decision-makers will look at the full picture and explain what is realistically available.
Get a free, no-obligation quote or call 0161 710 4100.
