Guides

How much invoice finance actually costs

The funder quotes 1.5% a month. What am I really paying to get this invoice paid early?

A monthly rate is not an annual rate, and it is charged on the amount advanced rather than the invoice. Turning the quote into the cash you actually receive today, then into an annual figure, is the only honest way to compare it against anything else.

Monthly discount rate vs flat discount: which one you are actually paying

One quote says 1.5% a month, another says a 3% flat discount. Which is cheaper?

The two are not directly comparable on their face. A monthly rate scales with the days you wait; a flat discount does not. On a short gap the flat discount can look worse than it is, and on a long gap the monthly rate can look better than it is.

Recourse vs non-recourse: the risk you actually carry

If the customer never pays, do I still owe the funder the money?

A recourse deal means the funder can come back to you for the advanced amount if the debtor defaults. That changes the product from a cash timing tool into a credit exposure, and it should be priced in before you sign.

The fees that sit outside the discount rate

My quote is 1.5% a month. What else will I be charged?

Registration, assessment, platform, dishonour and legal fees land once and eat into the cash you actually receive, which is exactly what the effective annual cost measures.

What an advance rate means and why 80% is not the whole deal

The funder only pays out 80% up front. Where does the other 20% go, and when do I get it?

A lower advance rate means less cash today and a higher effective cost on what you do receive, even at the same headline rate.

When invoice finance is not worth the cost

My customer pays in 14 days. Is funding that invoice even worth it?

Setup, assessment and registration costs do not shrink with the gap. On a short gap the fixed cost can exceed the whole benefit.