What is invoice finance?
Invoice finance helps your business get funds quickly by using outstanding invoices owed to your business.
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Instead of waiting for customers to pay, you can get the value of your invoice right away. This keeps your cash flow steady and predictable.​
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How does invoice finance work?
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With invoice finance, you can get the agreed invoice amount as soon as you send it to your customer, minus a small fee.
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This differs from traditional loans because it can grow with your business and provides a flexible way to manage cash flow.
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As your sales increase and you issue more invoices, the available funding can also rise. This means that you can have access to cash that matches your current business activity, making it easier to manage day-to-day operations and invest in growth opportunities.
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By shifting the focus from your business to the creditworthiness of your clients, we aim to level the playing field for businesses seeking fast access to working capital.
What are the different types of invoice finance?
There are two main types of invoice finance: invoice factoring and invoice discounting. While the concepts are similar, there are some key differences to keep in mind.
Spot invoice finance (factoring)
It provides instant cash for specific invoices
The invoice finance company handles payment collection from your customer
Our friendly credit management team will make direct contact with the customer
We will manage your sales ledger and credit control
It can be used for single or multiple invoices at a time
Fees are charged based on the invoice amount and services provided
Best for one-off or occasional invoice financing needs
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Confidential invoice discounting
It provides instant cash for specific invoices
You handle customer payments directly, with no involvement from the invoice finance provider​
Entirely confidential; customers are unaware of the financing arrangement
You manage your sales ledger and customer relationships
It can be used for single or multiple invoices at a time
Typically higher fees because of confidentiality
Best for confidential one-off or occasional invoice financing needs
One key difference between invoice factoring and invoice discounting is who handles the payments.
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With invoice factoring, we take care of your sales ledger, manage credit control, and collect payments from your customers for you. This means you don’t have to spend time chasing payments and can focus on running your business.
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If you’d rather keep control of collecting payments yourself, check out invoice discounting.
Both methods let you access the funds from your unpaid invoices* the same day you issue them. Keep reading to learn more about each option.
What is invoice factoring?
Invoice factoring is a way to get fast funds where your customers pay their invoices directly to the factoring company.
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With this option, we handle everything related to your invoices. We manage credit control and collect payments from your customers on your behalf, giving you time to focus on the day-to-day running of your business.
1. Raise an invoice
2. Get paid instantly
3. We collect payment
What is invoice discounting?
Invoice discounting is a way to get cash quickly and confidentially, where your customers continue to settle their invoices directly with you.
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This method keeps the process private - your customers don’t know a third party is involved. With invoice discounting, you keep control of managing payments and your sales ledger.
You send a copy of the invoice to the discounting provider and receive the agreed amount right away.
1. Raise an invoice
2. Get paid instantly
3. You collect payment
What industries use invoice finance?
Invoice finance is ideal for businesses that struggle with waiting for lengthy payment terms. It helps companies get cash quickly by using your unpaid invoices,* so you don’t have to wait days or weeks for payment.
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This type of financing is used successfully by a wide range of industries, including recruitment, manufacturing, healthcare, and engineering.
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What are the advantages of UK invoice financing?
Invoice finance offers a range of benefits that can help your business run smoothly, such as:
Fast access to funds
Get money from unpaid invoices* right away, so you don’t have to wait for customer payments.
Flexible use
Pick and choose which invoices to finance and when, with no long-term commitments.
Support business growth
Use the funds to invest in growth opportunities like buying more stock, or hiring staff.
Simplified collections
We can handle collecting payments from your customers, saving you time and effort.
Better financial planning
Quick access to cash helps you plan your finances and reduce stress from waiting for payments.
Pay suppliers on time
Have cash on hand to pay suppliers promptly, improving relationships and possibly getting better deals.
Scale with your business
As your business grows, so does your ability to finance invoices with us.
No need for collateral
Unlike traditional loans, which need you to promise to give assets to the lender if you can’t repay, your unpaid invoices* are enough to secure invoice finance.
What are the disadvantages of invoice finance?
To help you make an informed decision, there are a few things to keep in mind:
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Fees
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Fees for using invoice finance will be deducted from the funds you receive. It’s worth considering how these fees might affect your overall costs.
Customer relationships
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Some customers might not like a third party handling their payments. We aim to manage this smoothly to keep your customer relationships positive. Alternatively, we offer a confidential option.
Less control
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With factoring, we handle the collection of payments for you, which means you’ll have less direct control over the process.
Paperwork
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Some administrative work is involved in managing and submitting invoices for financing. That’s why we made our online submission process as easy as possible so it takes only a matter of minutes.
Is invoice finance right for my business?
Invoice finance lets you use your unpaid invoices* to get quick cash. Here’s a checklist to help you decide if it’s right for your business:
Understanding
Do you know what invoice finance is? And the differences between factoring and discounting?
Suitability
Does your business issue invoices? Does invoice finance fit with your business goals?
Needs
How much money do you need and why? Have you planned how you will use the funds?
Eligibility
Do you have unpaid invoices*? What’s their value? This affects how much money you can get.
Amount
Are you looking for an amount that aligns with what invoice finance providers typically offer?
Status
Are you an established business with a history of receiving payments on invoices?
Financials
Are your financial records detailed and up-to-date? Do your statements show a good record of payment?
Accounts
Are your accounts in good shape? Invoice finance providers will check your statements and credit report.
Usage
How will you use the funds if you get them? Have you thought about the impact on your business?
Costs
Do you know how much invoice finance will cost you? What are the fees and margins?
Management
Will you manage the sales ledger and collect payments yourself, or will the finance provider do it?
Agreement
​How long will the invoice finance arrangement last? What happens when it ends?
Am I eligible for UK invoice finance?
To be eligible for invoice finance with Penny, you need to:
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Have an invoice value of £500 to £200,000
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Be a limited company, partnership, or sole trader
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Be HMRC registered and based in England, Scotland, or Wales
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Have B2B invoices for goods or services that have been delivered
We have helped thousands of businesses across the UK get paid faster. Submit your invoice details to receive a no-obligation quote and see how we can help.
How much does invoice finance cost?
The cost of invoice finance can vary because it’s customised to fit your business' needs.
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We work closely with you to create a plan that suits your specific situation and goals. This means we aim to offer a pricing structure that is fair and flexible for your business. That’s why we offer a free, no-obligation quote to give you a clear idea of the costs involved.
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If you have any questions, we’re here to provide clear answers and help you understand the details.
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Feel free to reach out with any questions - we’re here to help.
How do I apply for invoice finance?
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It’s quick and easy to apply for UK invoice finance with Penny.
1. Open an account
Register with us in just a few minutes.
There are no long-term commitments, and you don’t need to finance your entire sales ledger to open an account.
3. Get paid within 24 hours
Once your invoice is approved, we’ll pay you the agreed amount of the selected invoice.
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Thanks to Open Banking, you’ll receive the funds in your account in as little as 24 working hours.
2. Upload your invoices
In your account dashboard, choose which customer invoices you want to finance and when you want to do it.
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We’ll then carry out the necessary checks and give you a no-obligation quote.
FAQs
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What types of businesses can use Penny?Sole Traders and Limited Companies registered in England and Wales.
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Are my invoices eligible for financing?Your invoices could be eligible for financing if they meet the below criteria: B2B invoices for completed work and/or delivered goods Minimum invoice value of £500 Maximum invoice value of £200,000
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Do you require accounts/bank statements?No, unlike the majority of other UK lenders, we do not ask for business account records or bank statements. Our model of invoice finance utilises technology to provide fast funding, and all we need from you is: Submitted invoice Debtor contact details (email or mobile) to verify the submitted invoice
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What is the difference between a Penny and Penny Plus account?A Penny account is a free member profile that gives you complete access to our selective invoice finance product. You can register your profile online in just a couple of minutes, and after completing Identity Verification, you can begin submitting invoices for funding straight away. Penny Plus will become our paid monthly subscription service, however this is still under development and not currently available.
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What is invoice finance?Invoice finance is an umbrella term for funding that enables businesses to borrow money against the amounts due from their customers. Lenders offering this model of finance advance a percentage of the requested invoice value, in return for a small fee. The main types of invoice finance include invoice factoring, invoice discounting and selective invoice finance.
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How does invoice financing work with Penny?Penny offers selective invoice finance, driven by technology. Unlike traditional models of financing, our UK spot factoring solution offers businesses a streamlined experience without requiring long-term commitments or lengthy paperwork. Penny is unique in that it has been developed for inclusivity, helping traditionally underserved business types (sole traders, micro-businesses etc.) accelerate cash flow with payment terms that benefit their growth. With flexibility at the core, we give businesses a centralised platform to select and advance invoices with ease. Leveraging technology, we provide real time data so that Penny users can check the status of their invoices at any time, providing decisions in under three hours. Once the invoice details have been verified, Penny pays 100% of the invoice value into the registered business bank account, minus a small fee.
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Who can I invoice with Penny?Penny advances B2B invoices to Limited Companies. In some circumstances we may be able to consider other business entities, please contact us to discuss your needs.
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Can I retain credit control for submitted invoices?At Penny, we take responsibility for collecting payment from your customers. Relinquishing credit control enables you to receive the total invoice value upfront, and reduces time spent within your business on payment processes.
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What happens if I have already invoiced a client myself?You will need to raise a new invoice through Penny. After setting up your account, your account manager will advise you on how to credit note the original invoice with your debtor.
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Can I use Penny to pay my bills? (Also known as reverse invoice financing)No, we only facilitate forward invoice financing on goods / services supplied.
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What contact information do you need for my customer?When you are completing your customer's details, it is best to provide contact details of a member of the accounts team if possible, rather than a generic accounts email address. This expedites validation of the invoice, so you get paid faster.
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Can I invoice my own company, or a company within my group?No, you can not have any business interest in the company you are invoicing.
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What is the Penny Quick Quote tool?Our Quick Quote tool is featured within your account dashboard under 'Get Started'. To use it, simply enter your customer's company name and we'll run a couple of quick checks to confirm whether they're eligible. Bear in mind that Penny's algorithm looks at the most recent data available, so even if we can't offer invoice factoring on an invoice for a particular company today, that could change in the future.
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I got an approval with Penny Quick Quote, however my invoice has been rejected, why?The Penny Quick Quote tool only considers the invoice amount and the debtor (the company paying the invoice). However real-time decisions also look at other factors, including the terms and nature of the invoice. Please get in touch with a member from our client support team for more details.
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My invoice has been approved, what happens next?Once Penny has approved your invoice and it has been issued to your customer, a member of our team will quickly get in touch with them to validate the invoice and get your funds advanced. The wide majority of transactions are validated in under 3 hours, and paid out within 24 working hours.
Explore frequently asked questions about invoice finance.
* Unpaid invoices refers to invoices within their agreed payment terms.