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.
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). More detail + scope
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
| Item | Value |
|---|---|
| Monthly invoice volume | £50,000 |
| Advance rate | 85% |
| Average customer payment days | 45 |
| Average outstanding advance | £63,750 |
| Monthly service charge (1.5%) | £750 |
| Monthly discount charge (6% APR on outstanding advance) | £319 |
| Minimum monthly fee top-up (£350 minimum, already exceeded) | £0 |
| Monthly cost | £1,069 |
| Total cost over 24 months (no exit fee) | £25,650 |
| Effective annualised rate on funded amount | 20.1% |
Source: Market Invoice lifetime cost calculator
Illustrative default scenario assuming consistent monthly volume and payment patterns. Adjust the calculator inputs above for your own facility quote.
View as plain-text Markdown
### Worked example: £50,000/month invoice volume over 24 months (default calculator scenario) | Item | Value | | --- | --- | | Monthly invoice volume | £50,000 | | Advance rate | 85% | | Average customer payment days | 45 | | Average outstanding advance | £63,750 | | Monthly service charge (1.5%) | £750 | | Monthly discount charge (6% APR on outstanding advance) | £319 | | Minimum monthly fee top-up (£350 minimum, already exceeded) | £0 | | Monthly cost | £1,069 | | Total cost over 24 months (no exit fee) | £25,650 | | Effective annualised rate on funded amount | 20.1% | Source: Market Invoice lifetime cost calculator Illustrative default scenario assuming consistent monthly volume and payment patterns. Adjust the calculator inputs above for your own facility quote.
“The 20.1% effective annualised rate in the worked example looks alarming next to an 8% loan APR, but the two are not measuring the same thing. The rate here is charged on the average outstanding advance and includes the service charge, which also pays for credit control, ledger management and debtor credit checks. A loan APR buys none of that, and a loan does not scale with your sales. Compare total pounds per year against the full cost of the alternative, including the overheads invoice finance absorbs.”
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.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
Last reviewed: 16 July 2026