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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 2 main types of invoice finance: Invoice Factoring and Invoice Discounting.