Invoice Discounting UK 2026

Invoice discounting is a form of invoice finance where a provider lends you a percentage of your unpaid invoices 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. On our list, advances run from up to 90% to up to 100% of invoice value. 13 of the 18 say up to 90%, and 5 say up to 95% or more.

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.

There are two main charges. A service charge on each invoice, which lenders do not publish (each one quotes per facility). And interest on the cash you draw, set as a margin over the Bank of England base rate (4% as of 5 November 2026). UK broker ABC Finance puts the margin at 1.5% to 3.5% for established businesses, and up to 4% to 6% for smaller or riskier ones. It also lists set-up fees of £250 to £5,000. Ask each lender for its full fees in writing.

On Market Invoice's editorial scoring, the top-rated UK providers offering confidential invoice discounting for 2026 are Close Brothers Invoice Finance, Bibby Financial Services, Ultimate Finance, Hydr, Aldermore Invoice Finance. The list is in order of our overall rating and covers lenders only, not brokers. UK broker ABC Finance says providers usually look for turnover of £250,000 to £500,000 for invoice finance, with some specialists going as low as £100,000.

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, 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 your turnover meets the lender's minimum (UK broker ABC Finance says providers usually look for £250,000 to £500,000 for invoice finance, some specialists lower), you 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.