Invoice Finance Offer Letter Decoder

### Worked example: 10 ticked terms, read by the decoder

| Term | Flag | Question to ask |
| --- | --- | --- |
| "All monies" wording in the debenture or guarantee | Negotiate or take advice | Can the security and any guarantee be limited to liabilities under this facility agreement only? |
| Early termination fee or charge | Negotiate or take advice | How exactly is the termination fee calculated, and does it fall away after the first term? |
| All-asset debenture (fixed and floating charge over everything the company owns) | Check the detail | Would you accept a charge limited to book debts? Which asset sales or new borrowing need your consent? |
| Personal guarantee capped at a fixed sum | Check the detail | What events let you call the guarantee? Is it joint and several? Does it end automatically when we repay and leave? |
| Minimum contract term | Check the detail | What would it cost us to leave at month 6, 9 and 12? Please put that in writing. |
| Automatic renewal unless notice is served by a set date | Check the detail | What is the exact last date to serve notice, and will you move to a rolling contract after the first term? |
| Concentration limit on any one customer | Check the detail | What is the limit for our largest customer by name, and will you agree a higher limit for that account? |
| Recourse period: unpaid invoices handed back after a set number of days | Check the detail | Is the recourse period counted from invoice date or due date, and what happens to the advance on an invoice that passes it? |
| Whole turnover: every invoice must go through the facility | Check the detail | Is the service charge on all invoices assigned or only on those you fund, and can some customers be left out? |
| Discount charge quoted as a margin over Bank of England base rate | Usually routine | Is the discount charge worked out daily on the drawn balance, and is there a minimum rate if base rate falls? |

Source: Market Invoice offer letter decoder

Result: 2 to negotiate, 7 to check, 1 routine. Combination flags raised: Capped guarantee + all-monies wording; Minimum term + automatic renewal + termination fee; Whole turnover + concentration limit.

### Invoice finance offer terms: meaning, flag and why it matters

| Term | What it means | Flag | Why it matters |
| --- | --- | --- | --- |
| "All monies" wording in the debenture or guarantee | The security covers every sum you owe the funder, on any account and at any time, not only what you owe under this facility. | Negotiate or take advice | If you later take another product from the same funder or its group, it is secured too, and a guarantee with all-monies wording can reach further than the facility you thought you were guaranteeing. |
| Cross-guarantee from other companies in your group | Each company in the group guarantees what the others owe the funder. | Negotiate or take advice | A problem in one company can pull the assets of the others in. That is a big step if the other companies hold property or trade separately. |
| Personal guarantee with no cap | A director is personally liable for what the company owes the funder under the guarantee, with no upper limit. | Negotiate or take advice | This removes the protection of limited liability for that director. Because the funder's first security is the debtor book, an uncapped guarantee on invoice finance is worth pushing back on. |
| Early termination fee or charge | A fee for ending the facility before the minimum term is up, set as a flat sum, a percentage of the limit, or a multiple of recent monthly charges. | Negotiate or take advice | It can wipe out the saving from switching to a cheaper facility later, and the basis of calculation matters as much as the amount. |
| Charge for collecting your ledger after default or termination | Some agreements let the funder charge a fee, often a percentage, on debts it collects itself after the facility ends on default or insolvency. | Negotiate or take advice | It only applies when things have already gone wrong, which is exactly when it hurts most, and it comes off the money left for the company and its other creditors. |
| All-asset debenture (fixed and floating charge over everything the company owns) | The funder takes security over all of the company's assets, not just the invoices it funds. The charge has to be delivered to Companies House for registration within 21 days of being created, so it becomes public. | Check the detail | Common in invoice finance, but it means you cannot give security over those assets to another lender without this funder's consent, and it has to be formally released (a statement of satisfaction, form MR04) when you leave. |
| Condition: a deed of priority or waiver from your existing lender | Your bank or another lender already holds security, and the funder will not advance anything until that lender agrees to rank behind it on the receivables or waives its claim over them. | Check the detail | It is routine paperwork, but it depends on a third party and often sets the start date more than the credit decision does. |
| Personal guarantee capped at a fixed sum | A director is personally liable, but only up to the stated amount. | Check the detail | The cap is only part of it. What triggers a demand, whether several directors are liable jointly and severally for the full cap, and whether it survives the end of the facility matter as much as the figure. |
| Warranty or indemnity guarantee (liability only if the warranties are breached) | The director is liable only for losses caused by a breach of the warranties the company gives about its invoices, for example that each invoice is genuine, the work is done and there is no dispute. | Check the detail | Narrower than a full guarantee, but ordinary habits such as invoicing before delivery, or not reporting a dispute or credit note, can breach a warranty. Know exactly what you are warranting. |
| Minimum contract term | You are committed to the facility, and usually its minimum fees, for a set period. | Check the detail | Leaving early usually means paying minimum fees for the time left. Price that before you sign, not when you want to move. |
| Automatic renewal unless notice is served by a set date | At the end of the term the facility rolls into a further term unless you give notice early enough. | Check the detail | Miss the date and you are committed for another term. The deadline often falls months before the term actually ends. |
| Notice period longer than three months | You have to give more than three months' notice to end the facility. | Check the detail | A long notice period hands the timing of any switch to the funder. Our switching checker treats anything over three months as a timing constraint. |
| Minimum monthly or annual fee | If your percentage charges come to less than a set amount, you pay the difference anyway. | Check the detail | In a quiet or seasonal month the minimum fee, not the headline rate, sets what you pay. |
| Concentration limit on any one customer | No single customer can make up more than a set share of the ledger the funder will lend against. Anything above that share is not funded. | Check the detail | If one customer is a large part of your sales, the real facility can be much smaller than the headline limit. |
| Recourse period: unpaid invoices handed back after a set number of days | Once an invoice is older than the stated age, the funder stops funding it and takes back what it advanced, usually by deducting it from your next drawings. | Check the detail | If your customers routinely pay late, invoices fall out of funding just as you need the cash. Check whether the clock runs from invoice date or due date. |
| Exclusions from eligible debts (overseas customers, related companies, contra accounts, stage payments, retentions) | Some of your invoices will not count towards what you can draw, however good the customer is. | Check the detail | Exclusions are one of the main reasons the amount you can draw falls short of the headline advance rate. |
| Availability reserve or retention held back | The funder holds back an amount from what you could otherwise draw, as a buffer against disputes, credit notes or other risks. | Check the detail | A reserve reduces your cash on day one, and some agreements let the funder raise it without notice. |
| Whole turnover: every invoice must go through the facility | All of your invoices are assigned to the funder, not only the ones you want funded. | Check the detail | If the service charge applies to all assigned invoices, you pay on invoices you never needed to borrow against, including ones the funder will not fund. |
| Extra charges on overdue invoices | A higher rate or an added fee on invoices that stay unpaid past a set age. | Check the detail | This lands exactly when a customer is paying slowly, and it is often missing from the headline quote. |
| Confidential facility, with the right to notify your customers if conditions are breached | Customers are not told, but the funder can switch the facility to disclosed, and contact them, if you breach certain terms. | Check the detail | The confidentiality you are paying for is conditional. Know which breaches allow the switch. |
| Bad debt protection (non-recourse) | The funder bears the loss if an approved customer cannot pay because of insolvency, within that customer's credit limit. | Check the detail | Cover is usually limited to approved customers and to insolvency, not disputes, and there can be an excess or a share of the loss you still carry. |
| Events of default: change of control, "material adverse change", covenant breaches | A list of events that let the funder stop funding, demand repayment or end the facility. | Check the detail | Broad wording such as a material adverse change gives the funder wide discretion. A sale of shares or a new director can also count. |
| Individual credit limits on each customer | The funder sets a limit per customer and will not fund invoices above it. | Usually routine | Normal practice, but a low limit on a growing customer caps what you can draw against them. |
| Discount charge quoted as a margin over Bank of England base rate | The interest on money you draw is the margin plus base rate, so it moves when base rate moves. Base rate is 3.75% (since 18 December 2025), so a quoted margin of 3% would mean 6.75% a year today. | Usually routine | Normal, but the way the charge is worked out matters: daily on the balance you have drawn is cheaper than on the full advance from invoice date. |
| Audit or survey fees | You pay for the funder's periodic inspections of your ledger and records. | Usually routine | Usually modest, but ask how often audits happen and whether extra ones can be charged if the funder is concerned. |
| Transaction fees (same-day payments, adding a new customer, credit checks) | Small per-item charges on top of the service and discount charges. | Usually routine | Individually small, but they add up for a business that adds new customers often or needs same-day payments. |
| Disclosed facility: your customers are told to pay the funder | A notice of assignment goes to your customers, and they pay the funder directly. | Usually routine | Normal for factoring. Think about how your larger customers will react, and who will be chasing them and in what tone. |

Source: Market Invoice offer letter decoder

Flag levels are Market Invoice's own reading of how much attention each term usually deserves. Charge registration: Companies Act 2006, s859A (21 days) and s859L (statements of satisfaction, filed on form MR04). Base rate from the Bank of England.