Invoice Finance APR Equivalent Calculator UK
This calculator converts a quoted invoice finance facility into a single true APR equivalent, so you can compare it directly against a business loan or credit line. It combines a service charge percentage with a discount charge above the Bank of England base rate, annualising the service charge over your actual debtor days and the cash advanced. On the default example (0.7% service charge, 60 debtor days, 80% advance rate, 2% discount margin over the current 3.75% base rate), the true APR equivalent comes out at 11.1%, comparable to a mid-tier UK business loan. Below 8% it is rated cheaper than a typical loan, 8 to 12% mid-tier, 12 to 18% comparable to higher-rate business credit, and above 18% expensive.
Calculator
True APR equivalent
11.1%
Invoice finance at this cost is comparable to a mid-tier UK business loan. Worth considering when the cash flow benefit (faster growth, lower bad debt) is genuine.
| Item | Value |
|---|---|
| Service charge | 0.7% of turnover |
| Discount margin | 2.0% above BoE base (3.75%) |
| Average debtor days | 60 |
| Advance rate | 80% |
| Service charge annualised on cash advanced | 5.3% |
| Total discount charge | 5.75% |
| True APR equivalent | 11.1% |
| Comparable to | Mid-tier business loan |
Source: Market Invoice APR equivalent calculator, base rate 3.75%
Illustrative default scenario. APR equivalent = service charge annualised over debtor days on the cash actually advanced, plus the full discount charge.
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### Worked example: 0.7% service charge, 60 debtor days (default calculator scenario) | Item | Value | | --- | --- | | Service charge | 0.7% of turnover | | Discount margin | 2.0% above BoE base (3.75%) | | Average debtor days | 60 | | Advance rate | 80% | | Service charge annualised on cash advanced | 5.3% | | Total discount charge | 5.75% | | True APR equivalent | 11.1% | | Comparable to | Mid-tier business loan | Source: Market Invoice APR equivalent calculator, base rate 3.75% Illustrative default scenario. APR equivalent = service charge annualised over debtor days on the cash actually advanced, plus the full discount charge.
“An APR equivalent leaves out the fees that often decide the real cost: minimum monthly service charges, setup and renewal fees, and CHAPS or same-day payment charges. On a small ledger the minimum fee can dominate, so a facility with a lower APR equivalent can cost more in pounds than one with a higher rate. Compare total pounds paid per year for your actual volume, not just the percentage.”
What this tool tells you
Translates a quoted invoice finance facility (service charge % + discount charge) into a true APR equivalent so you can compare to a business loan or credit line on the same basis.
All UK invoice finance providers serve businesses across the full UK. The numbers above are typical UK market rates for invoice finance APR calculator UK. For real quotes matched to your specific business, use our 60-second comparison tool.