What Is Invoice Trading?
Invoice trading is an online marketplace where businesses sell individual invoices to investors at a discount. Unlike traditional factoring (ongoing facility with one provider), invoice trading is per-invoice with competitive bidding. MarketInvoice (now Kriya/Allica Bank) pioneered this in the UK. Platforms include Crowdz, Previse, and Marketfinance.
Why This Matters
Invoice trading emerged in the UK around 2011 as a digital alternative to traditional invoice finance. Instead of locking into a 12-month facility with a single lender, businesses upload invoices to an online platform where multiple investors bid to advance funds. This marketplace model typically delivers faster decisions (often same-day), lower minimum volumes (sometimes single invoices from £1,000), and transparent pricing you see before accepting. For UK SMEs with sporadic cashflow gaps or those who find selective invoice finance too restrictive, invoice trading offers genuine transaction-by-transaction flexibility. The approach particularly suits project-based businesses, startups without trading history for conventional facilities, and firms who need working capital for one-off growth opportunities without committing to ongoing finance relationships. However, the model depends on investor appetite, so funding isn't guaranteed, and per-invoice fees can exceed facility rates if you use it frequently.
Key Points
- Invoice trading platforms let you upload individual invoices and receive competing bids from institutional investors and funds, typically advancing 70-90% within 24-48 hours of acceptance.
- Pricing is transparent and quote-based: you see the discount rate or fee before accepting a bid. Typical costs range from 1-5% per invoice depending on debtor creditworthiness, invoice size, and payment terms.
- No minimum turnover or ongoing commitment in most cases. Some platforms accept invoices as low as £1,000, making it accessible to micro-businesses and startups that don't qualify for traditional facilities from Close Brothers or Bibby Financial Services.
- The platform performs credit checks on your debtor (the business that owes you), not just your company. Invoices to creditworthy corporates or public sector bodies often attract lower rates and faster funding.
- Settlement happens when your customer pays the invoice (usually directly to a platform trust account). The platform then remits the remaining balance minus fees. If your debtor pays late, additional fees may apply.
- Invoice trading is non-recourse on some platforms (investor bears default risk) or with-recourse on others (you repay if debtor doesn't pay). Always confirm the recourse terms before uploading.
- Not suitable for high-volume, regular invoice finance needs. Businesses invoicing weekly and needing continuous working capital are better served by traditional facilities from providers like Ultimate Finance, Lloyds Bank Invoice Finance, or Skipton Business Finance.
Real-World Example
A Bristol web development agency with £180,000 annual turnover completes a £12,000 project for a retail client on 60-day terms. The agency needs funds immediately to pay two freelance developers.
They upload the invoice to an invoice trading platform. Within 6 hours, three investors bid. The agency accepts a bid advancing £10,200 (85%) at a 2.8% fee. Funds arrive the next business day. When the retailer pays 58 days later, the platform releases the remaining £1,800 balance minus the £336 fee, netting the agency £11,664 total.
Common Pitfalls
- Uploading invoices to multiple platforms simultaneously. Most platforms require exclusivity on each invoice and will reject duplicates, potentially flagging your business as high-risk.
- Assuming funding is guaranteed. Invoice trading is investor-driven; if your debtor has poor credit or the invoice is unusually large, you may receive no bids or only expensive ones.
- Using invoice trading for routine, predictable cashflow. Uploading 20 invoices monthly at 3% each costs far more than a 1.5% monthly facility fee from traditional providers like Barclays Invoice Finance or HSBC Invoice Finance.
- Ignoring recourse terms. With-recourse platforms require you to buy back unpaid invoices after 90-120 days. If your debtor goes bust, you still owe the advance plus fees.
- Not informing your customer. Some platforms require notification (debtor knows you've sold the invoice), others operate disclosed (debtor pays you, you remit to platform). Mixing these up damages client relationships.
What to Do Next
- Identify whether you need one-off invoice funding or regular facilities. If you invoice the same clients repeatedly on predictable terms, compare traditional selective invoice finance from Aldermore or Novuna Business Finance before committing to per-transaction trading.
- Check platform eligibility: minimum invoice values (typically £500-£5,000), debtor location (UK-only or international accepted), and sector restrictions. Some platforms exclude construction CIS invoices or recruitment temp-worker invoices.
- Request sample fee structures from 2-3 platforms. Compare the discount percentage, advance rates, and any monthly platform fees. Factor in whether pricing varies by debtor credit rating or invoice age.
Related Questions
Is invoice trading regulated by the FCA?
No. Invoice trading platforms facilitate commercial lending between businesses and investors, which falls outside FCA consumer credit regulation. The platform itself may be FCA-authorised for payment services or operating a crowdfunding platform, but the invoice finance transaction is unregulated. This means no Financial Ombudsman Service recourse if disputes arise.
Can I use invoice trading if I already have a bank overdraft?
Usually yes, but check your overdraft terms. Some banks include a clause prohibiting assignment of debts without consent. Invoice trading assigns your invoice to investors, so you may need written bank permission. If you're considering a traditional invoice finance facility from NatWest Invoice Finance or Santander Invoice Finance, their security will typically require you to close or subordinate your overdraft.
What happens if my customer disputes the invoice after I've been funded?
On with-recourse platforms, you must repay the advance immediately and resolve the dispute yourself. On non-recourse platforms, the investor bears the risk, but most platforms exclude 'performance disputes' (poor quality work, undelivered services) from non-recourse protection. Always ensure your customer has accepted the invoice and goods/services before uploading.
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: 6 April 2026