Adjudication vs Invoice Finance: When Each Makes Sense

Market Invoice is an independent UK invoice finance comparison site that lists 83 UK invoice finance companies in its directory (65 lenders trading) and has 27 in its Rate Index.

Use adjudication when the debt is disputed and you need a binding decision. Use invoice finance when the debt is undisputed and you need cash before the contractor pays. Section 108 of the Construction Act requires the adjudicator "to reach a decision within 28 days of referral" unless the period is extended (read 20 October 2026). Invoice finance advances part of the value of an undisputed invoice or Application for Payment once your facility is in place, but lenders do not normally fund a sum the customer disputes.

General information, not legal advice.

What this page covers

This page covers:

adjudication vs invoice finance for UK subcontractors: speed, cost, disputed vs undisputed debt, relationship impact, using both, insolvency.

Not covered here:

Specific legal advice (consult a construction solicitor), the adjudication process in detail (see /construction-finance/adjudication-unpaid-afp/), individual provider reviews (see /providers/)

Side-by-side

Side-by-side
FactorAdjudicationInvoice finance
Best forDisputed debt, binding ruling neededUndisputed debt, cash needed now
Time to cashGives a decision, not cash; if the contractor still does not pay, enforcing the decision takes longerDepends on the lender and on whether a facility is already in place; ask how quickly it pays against a new Application for Payment
Resolves a dispute?Yes; section 108 makes the decision binding until the dispute is finally settled by court, arbitration or agreementNo
Funds a disputed sum?N/ANot normally; lenders fund undisputed sums
Relationship impactFormal dispute; the contractor is a party to itLow; on a confidential facility the contractor is not told

Choose adjudication when

The main contractor disputes the valuation, variations, defects or contra-charges, and you need a decision to end the deadlock. It also suits a strong pay less notice point on a sum large enough to justify the fees. The statutory right comes from the Construction Act and, where the contract is silent, from the Scheme for Construction Contracts. The full process is set out in adjudication for unpaid AfPs.

Choose invoice finance when

The sum is undisputed (or there is a valid notified sum with no pay less notice) and the problem is the wait to be paid. Some lenders will fund Applications for Payment; ask each one, as few publish terms for it.

Using both

You can finance the undisputed certified or notified sums while you adjudicate the contested balance. If the adjudicator decides in your favour, ask your lender whether it will then fund the amount awarded. See the subcontractor finance page and our best construction finance providers comparison.

AP

Adam Parker

Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd

Adam was managing director of Penny, a UK invoice finance business, from July 2020 to November 2023. His career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library. Career record.

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Adjudication vs Invoice Finance FAQ

Can the 28 days be extended?

Yes. Section 108 of the Construction Act says the contract must "allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred", and the parties can agree a longer period after the dispute has been referred. The contract must also set a timetable aimed at appointing the adjudicator and referring the dispute "within 7 days" of your notice (legislation.gov.uk, read 20 October 2026).

What does each option cost?

Invoice finance usually costs a service charge plus a discount charge on the money you draw. Most lenders do not publish their rates, so get a quote. Adjudication costs the adjudicator's fees plus your own legal or claims consultant costs, and who pays the adjudicator is part of the decision. Ask a construction solicitor or claims consultant for an estimate on your dispute before you start.

Will adjudication damage my relationship with the main contractor?

It can. The main contractor will know you have referred them. With a repeat client, finance can bridge the gap without a formal dispute. Where the relationship has already broken down, or the sum is large and clearly owed, adjudication gives you a binding decision rather than relying on goodwill.

What if the main contractor is insolvent?

Neither option is likely to get you paid in full. A decision against an insolvent company may be hard or impossible to collect on, and lenders are unlikely to advance against a customer that has failed credit checks or entered administration. Bad debt protection (non-recourse factoring) only helps if it was in place before the customer failed, so check the policy terms.

Take advice from a construction solicitor or insolvency practitioner, and see our pages on non-recourse factoring and customers in administration.