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Invoice finance pricing is quoted per business, not published, so the defaults here are market ranges rather than an offer — your real quote will hinge on your turnover, your sector, and above all how creditworthy your customers are. Two things this calculator deliberately leaves out because they sit at facility level rather than on a single invoice: the arrangement fee (commonly 1–2% of the facility, or a few hundred to a few thousand pounds as a flat charge) and the minimum monthly service fee, which means a quiet month can still cost you the full charge on invoices you never raised. Both can dwarf the per-invoice maths above if your volumes are lumpy. Also check the notice period before signing — exiting a facility usually needs three to six months' notice, or a termination charge instead. Ask for the total cost over twelve months of your realistic volume, in pounds, not the headline percentage.
Invoice financing lets you draw most of an unpaid invoice's value straight away instead of waiting 30, 60 or 90 days for the customer to settle it. There are two main flavours in the UK: invoice factoring, where the provider takes over collections and your customer knows about it, and invoice discounting, which is confidential and leaves credit control with you. Either way you pay twice — a service fee charged as a percentage of the invoice value, and a discount charge, which is interest on the money advanced, usually quoted as a margin over the Bank of England base rate and accrued daily.
That two-part structure is exactly why invoice finance looks cheap and often isn't. A 1.5% service fee plus "base plus 3.5%" sounds modest next to a business loan APR, but on a 45-day invoice you're paying that 1.5% for six and a half weeks of borrowing, not a year. This invoice finance calculator does the conversion for you: it works out what you're advanced, what each fee costs in pounds, and what the whole thing annualises to on the money you actually received — the number that lets you compare invoice factoring costs fairly against an overdraft, a short-term loan, or simply chasing the invoice harder yourself. Figures reflect UK market ranges as at July 2026, with the base rate held at 3.75% on 18 June 2026.
Because the fees are charged for a short window but the percentage reads like an annual one. A 2% total cost on an invoice paid in 45 days is roughly 16% a year once you scale it up. That isn't a trick on the provider's part — it's just what short-dated borrowing costs — but it's the only figure that lets you compare it honestly with an overdraft or a loan.
Discounting is almost always cheaper on paper, because you're still doing the credit control the factoring fee pays for. Whether it's cheaper in practice depends on whether chasing payment yourself costs you less than the difference — if it's eating a day a week of your time, or invoices are drifting past 60 days because nobody's chasing, factoring can be the better deal despite the higher fee.
With factoring, yes — they pay the provider directly and receive the chasing correspondence. With confidential invoice discounting, no; payments go into a trust account in your name and the relationship looks unchanged. Some businesses worry that visible factoring signals financial distress to clients, though it's routine in recruitment, haulage and construction.