UK Invoice Finance Lifetime Cost Calculator

Project the total cost of an invoice finance facility over 12 to 36 months. Includes service charge, discount charge, minimum monthly fees and exit cost.

Last updated: 10 May 2026.

Quick Reference

Direct Answer

UK invoice finance total cost has four components: service charge (0.5-3% of invoice value), discount charge (1.5-3% above BoE base on advance), minimum monthly fee (£200-£500), and exit fee (1-3 months average fee on early termination).

Summary

This calculator projects total UK invoice finance cost over a chosen term (12 to 36 months) by combining service charge, discount charge, minimum monthly fee and optional exit fee. Inputs: monthly invoice volume, average advance rate, customer payment days, fee structure, term length. Outputs: monthly cost, total cost over term, effective annualised rate, comparison vs overdraft alternative.

This Page Covers

UK invoice finance lifetime cost projection: service charge, discount charge, minimum fees, exit cost, effective APR

Not Covered Here

Individual lender quote comparison (use /providers/), industry-specific pricing (use /best/), single-invoice spot factoring cost (use /tools/cost-of-not-using-finance/)

Calculator

How the calculation works

Monthly service charge = monthly invoice volume × service charge percentage. Monthly discount charge = average outstanding advance × discount APR ÷ 12. Average outstanding advance = monthly volume × advance rate × (payment days / 30). Monthly minimum fee top-up = max(0, minimum fee minus monthly service charge). Exit fee = months of average monthly cost charged on early termination.

Total lifetime cost = (monthly cost × term months) plus exit fee. Effective annualised rate = (total lifetime cost ÷ average outstanding advance) ÷ (term in years).

Comparing against alternatives

Use this lifetime total against the cost of: (1) overdraft (typically 6-12% APR plus arrangement and annual review fees), (2) term loan (typically 5-10% APR over fixed term), (3) equity dilution (permanent percentage of future enterprise value, effectively infinite cost). For growing UK businesses with strong B2B receivables, invoice finance usually costs less than equity dilution and scales better than overdrafts.

When to recalculate

Re-run this calculator at facility renewal (typically annually), when customer payment patterns change materially (covered period DSO shifts more than 7 days), or when your invoice volume grows or contracts more than 25 percent. Use the result to negotiate at renewal: if your business has improved (faster pay, lower disputes, more predictable volume), the lender should price you better.

OM

Oliver Mackman

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: 10 May 2026

Get 3 Quotes Matched to Your Business

Free, no obligation, 60 seconds.

Your details are secure. We only share them with matched providers. See our privacy policy.

85 providers in panel · 24hr indicative quotes · No obligation

Lifetime Cost Calculator FAQ

What's included in the invoice finance lifetime cost?

Four cost components: service charge (% of invoice value, typically 0.5-3%), discount charge (interest on advance, typically 1.5-3% above BoE base = 5.25-6.75% APR currently), minimum monthly service charge (typical £200-£500/month even if you don't draw), and exit fees if you terminate before contract end (typically 1-3 months of average fee).

How is the discount charge calculated?

Daily on outstanding advance. Formula: (advance amount × annual rate) ÷ 365 × days outstanding. The longer your customer takes to pay, the more discount charge accumulates. Faster-paying customers cost dramatically less.

Do all providers charge minimum monthly service charges?

Most whole-book providers do (£200-£500/month standard). Selective spot factoring providers (Hydr, Triver, Kriya) typically don't because there's no facility commitment. Confirm minimum fees in your facility documentation.

Cost comparison: invoice finance vs overdraft?

Overdrafts: 6-12% APR plus arrangement fees plus annual review fees, capped at the agreed limit. Invoice finance: 6-15% effective annualised cost on funded receivables, scales with sales growth. For growing UK businesses, invoice finance scales better; for stable cashflow gaps, overdraft is often cheaper. Use the calculator above to model both.

Effective APR for invoice finance UK?

Typically 8-15% effective annualised cost depending on customer payment speed, advance rate, fee structure and discount charge. Faster-paying customers and lower advance rates reduce effective APR. Use the calculator to model your specific business.

When does invoice finance lifetime cost exceed equity dilution cost?

Almost never for ongoing growth funding. Equity dilution is a permanent percentage of all future enterprise value (effectively infinite-multiple cost on invested capital). Invoice finance is fixed periodic cost. For a £100k working capital need over 3 years, invoice finance cost typically £15-30k vs equity giving up 2-5% of company forever (worth £50k+ on a £1m+ valuation, more on growing valuations).