Can I Finance Invoices to My Landlord or Related Parties?
No. Invoices between related parties, group companies, directors, or family-controlled entities cannot be factored. Providers need genuine arm's length transactions to assess credit risk independently. Related party invoices are excluded from every mainstream facility.
What this means for your business
In practice, this means that if your business raises invoices to a company you own, part-own, or control in any way, those invoices cannot be included in an invoice finance facility. The same applies to invoices raised to a director's other business, a family member's company, or any entity where there is a connected ownership structure. Invoice finance providers rely on the debtor being a genuinely independent third party, because they need to assess that debtor's creditworthiness and ability to pay without any conflict of interest. If the debtor and the supplier share common ownership or control, the transaction cannot be treated as a standard commercial debt, and lenders will exclude it from any eligible ledger.
Key points
- Invoices raised to group companies, subsidiaries, or parent companies are ineligible for invoice finance in the UK.
- Transactions between a business and a company controlled by one of its directors will be treated as related party dealings and excluded.
- Lenders require arm's length commercial transactions where the debtor has no influence over the supplying business.
- Family-controlled entities are also caught by related party rules, even if the family members operate entirely separate businesses.
- Attempting to include related party invoices on a facility can constitute a breach of the finance agreement and may trigger termination of the facility.
Common pitfalls
A common mistake is assuming that because two businesses operate independently in practice, they will be treated as unrelated by a lender. If there is any shared directorship, common shareholding, or family connection between the debtor and the supplier, most providers will exclude those invoices regardless of how commercially genuine the underlying transaction appears. Businesses that have complex group structures sometimes inadvertently submit related party invoices onto a facility, which can cause problems during audits. It is always worth mapping your ownership and directorship connections before applying for invoice finance.
Related questions
What counts as a related party for invoice finance purposes?
A related party typically includes any company where there is shared ownership, a common director, or a family connection between the people controlling each business. Lenders will usually ask for details of your shareholding structure and directorship positions to identify any such links. If there is any doubt, you should disclose the relationship to your provider before submitting the invoice.
Can I still use invoice finance if some of my customers are related parties and others are not?
Yes, you can still access an invoice finance facility based on your independent, arm's length debtors. You would simply exclude the related party invoices from the ledger you present to the lender. The facility would be sized around the eligible portion of your debtor book only.
Does it make a difference if the related party invoice is for a genuinely commercial transaction at market rates?
Unfortunately, commercial substance does not override the related party restriction in invoice finance. Even if the goods or services were delivered at full market value and the contract was properly documented, the lender cannot independently verify or enforce collection from a debtor connected to the supplier. The invoice will remain ineligible regardless of how legitimate the underlying trade is.
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 20 May 2026