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What is invoice financing in the UK?

Invoice financing in the UK is where an invoice finance provider buys a business’s unpaid invoices for a fee. The provider will often provide a percentage value, usually up to 90%, of the invoice upfront in the form of a loan.

Once the client has paid the invoice, the lender will collect the balance in addition to a small fee. This means businesses can free up cash flow and don’t have to wait to receive payment for their goods or services. There are two main types of invoice finance: invoice factoring and invoice discounting.