Invoice Discounting UK 2026

Invoice discounting is a form of invoice finance where a provider lends you a percentage of your unpaid invoice book, usually up to 85% to 90%, while you keep control of your own credit control and collections. It is normally confidential, so your customers are not aware a facility is in place and continue to pay you directly into a trust account. It suits established businesses with their own finance function.

With invoice discounting you run your own collections and the facility is confidential. With factoring the provider chases your customers and the arrangement is disclosed. Discounting is generally cheaper because the provider does less work, but it requires you to have credible credit-control processes, which is why lenders usually reserve it for larger, more established businesses.

Invoice discounting has a service charge of roughly 0.25% to 1% of invoice value, lower than factoring because you handle collections, plus a discount charge of the Bank of England base rate (3.75% as of 18 December 2025) plus a margin of about 1.5% to 3% on the cash drawn. Total effective cost is typically 0.5% to 1.5% of annual turnover.

On Market Invoice's editorial scoring, the top-rated UK providers offering confidential invoice discounting for 2026 are Kriya (Allica Bank), Close Brothers Invoice Finance, Bibby Financial Services, Ultimate Finance, Hydr. Ranking weights overall rating, then transparency, then setup speed. Most discounting facilities are aimed at businesses with turnover above £250,000 with their own credit control.

Confidential invoice discounting is the standard form and keeps the facility hidden from your customers. Disclosed discounting also exists, where customers are notified but you still run collections. Lenders offer confidential discounting to businesses they judge to have strong enough systems and financials to manage their own debtor book reliably.

Discounting an invoice means borrowing cash against it before your customer pays, rather than waiting the full 30, 60 or 90 days for the money. A provider advances a percentage of the invoice value, usually up to 85% to 90%, and charges a fee for the early access to funds. When your customer settles the invoice, you clear the advance and keep the balance. The invoice itself is not sold at a reduced price; the discount refers to the finance charge for releasing the cash early.

Invoice discounting is a good idea when you have turnover above roughly £250,000 to £500,000, run your own credit control competently, and want the cheapest way to release cash tied up in unpaid invoices without your customers knowing. Because you keep collections in-house it costs less than factoring, and funding scales automatically as you invoice more. It is a weaker fit if your credit-control processes are informal, your debtor book is concentrated in one or two customers, or you would rather the provider chased payment for you.

The advantages of invoice discounting are lower cost than factoring, confidentiality so customers never know, funding that grows with turnover, and no property security required. The disadvantages are that you keep the credit-control workload yourself, lenders usually require higher turnover and proven collection systems, contracts often carry a minimum term, and the discount charge rises the longer your customers take to pay. It works best for established businesses that already manage collections well.