How does invoice finance affect key financial ratios in a company's accounts?
Where a facility is structured as a secured borrowing rather than a true sale, it will appear as a liability on the balance sheet, which can increase the debt-to-equity ratio and reduce net asset values. Derecognition of receivables under a true sale structure removes the asset and the corresponding liability, which can improve the current ratio. Businesses seeking to maintain specific covenant ratios for other lenders should model the accounting impact of their chosen invoice finance structure before signing up.
What this means for your business
Where a facility is structured as a secured borrowing rather than a true sale, it will appear as a liability on the balance sheet, which can increase the debt-to-equity ratio and reduce net asset values. Derecognition of receivables under a true sale structure removes the asset and the corresponding liability, which can improve the current ratio. Businesses seeking to maintain specific covenant ratios for other lenders should model the accounting impact of their chosen invoice finance structure before signing up.
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: 13 June 2026