UK Invoice Finance Benchmark Report

UK Invoice Finance Benchmark Report 2025/6 Edition
Prepared by Glenn Blackman, MBA, Managing Partner of FundInvoice LLP
Research Conducted: September 2025 | Web Version Published: 17th September 2026

About This Report

At FundInvoice LLP, we help UK companies secure invoice finance facilities that are both cost-effective and tailored to their needs. Over the last decade, we have conducted a series of independent studies on late payments, funding accessibility, pricing and the challenges faced by SMEs. This UK Invoice Finance Benchmark Report 2025/6 brings that research together in one place.

For business owners, it provides a way to compare their own experience against national benchmarks, whether that is how quickly they are paid, how much funding is accessible or how much others are being charged. For advisers and journalists, it provides an evidence-based snapshot of the market. Our goal is to provide clarity, identify areas for improvement and highlight where better options may be available.

Executive Summary

Our 2025 research highlights that UK businesses continue to face severe cash flow pressures, with invoice finance often underused or misunderstood as a solution. By compiling data from our latest surveys and studies, we have created our most complete picture to date of how SMEs interact with cash flow and invoice finance.

84% of surveyed businesses experienced late payments¹
84% of those not paid upfront said they would benefit from cash being released from invoices immediately⁴
59% had not heard of invoice finance⁴
About 1% of UK businesses are estimated to use invoice finance¹
87% average difference in invoice finance costs between the cheapest and most expensive quotes for the same business

Key Findings

Late payments remain endemic. Some 84% of surveyed UK businesses had experienced late payments. Of those affected, 11% reported that customers took an average of at least 31 days beyond agreed terms. Among businesses not paid upfront, 84% said they would benefit from funds being released from invoices immediately.
Only around 1% of UK businesses use invoice finance. Applied to the UK's 5.5 million businesses, this equates to approximately 55,000 firms. This indicates low market penetration and potential for growth if awareness and accessibility improve.
There are numerous providers, with marked service differences. At the time of the report, we listed 84 distinct organisations offering some form of invoice finance in the UK. Independently verified average customer ratings among reviewed providers ranged from 4.9 out of 5 to 1.5 out of 5.
Awareness is low. Some 59% of surveyed businesses had not heard of invoice finance. Once it was explained, 83% said they would recommend it to businesses with cash flow issues.
Costs vary substantially. Across the quotes analysed, the average difference between the cheapest and most expensive quote for the same business was 87%. Average total cost, excluding Bank Base Rate, was 0.90% of annual turnover for invoice discounting and 1.27% for factoring.
Business confidence is fragile. The three leading concerns in our 2025 business survey were growing sales, economic uncertainty, and cash flow and funding.
AI is emerging as a business tool. More than three-quarters of surveyed businesses said they were using AI or exploring its applications.

The bottom line: UK businesses are still waiting too long to be paid, and many lack awareness of invoice finance as a possible solution. When businesses do use invoice finance, costs and funding levels can vary significantly between providers. Regular benchmarking can show whether an existing user may be overpaying or missing better funding options.

Contents

Market overview
Drivers of demand
Product awareness
Fees and charges
Advance rates and funding
Service and satisfaction
Sector insights
Emerging trends
Expert commentary
How to use this report
Sources

1. Market Overview

Product Terminology

Invoice finance is the umbrella term used in the UK for invoice factoring and invoice discounting facilities. Both services release advances, called prepayments, against outstanding sales transactions, such as invoices or applications for payment. Factoring includes a credit control service. Both factoring and invoice discounting are available with additional options, including bad debt protection and specialist payroll management.

Businesses may submit all invoices, known as whole-turnover funding, or selected invoices. Facilities can cover sales to UK businesses, overseas debtors or both. Providers often specialise in particular products, client risk profiles or sectors, making the choice of provider more complex.

Number Of Invoice Finance Users

Based on our survey results, we estimate that about 1% of the UK's 5.5 million businesses, approximately 55,000 firms, use invoice finance. This highlights both the product's limited penetration and the potential growth that could result from improved awareness and accessibility.

Number Of Invoice Finance Providers

At the time of the research, we listed 84 distinct organisations offering some form of invoice finance in the UK. The number of providers had grown with the arrival of fintechs, challenger banks and niche specialists alongside established banks and independent institutions. More recently, acquisitions, withdrawals and business failures had reduced the total.

Invoice finance can be attractive to providers because they have direct control over the asset underpinning the transaction, normally the debtor ledger of unpaid invoices. Smaller or higher-risk clients can also offer proportionally higher margins, because the amount advanced is limited while pricing reflects the additional risk.

2. The Drivers Of Demand

The two principal drivers of demand are:

Improving cash flow. Poor cash flow is often caused by offering customers a credit period or experiencing late payment.
Financing growth. As a business expands, funds tied up in its growing sales ledger can be released to help finance that expansion.

Invoice finance can also help finance business acquisitions by using the target company's book debts to contribute towards the purchase price. Start-up businesses may qualify even when other forms of finance are unavailable, because eligibility is often based substantially on the quality of the debtor book.

Cash Flow Pressures Linked To Late Payments

Our September 2025 survey found:

84% of respondents had experienced late customer payments.
11% of those affected said customers took an average of at least 31 days beyond agreed terms.
49% of all respondents experienced effects beyond minor inconvenience, including recurring cash flow pressure, delayed payments to suppliers or staff, or declining new work.

A separate survey found that 84% of respondents who were not paid upfront would benefit from funds being released from invoices immediately. Offering credit terms and experiencing late payment therefore create a credit gap that invoice finance may be able to bridge.

Cash Flow Pressures Linked To Growth

The three leading concerns reported by UK businesses for the remainder of 2025 and into 2026 were:

Business concern	Share of responses
Growing sales	24%
Economic uncertainty	18%
Cash flow and funding	15%

Businesses that win more sales can find working capital stretched as wages, materials and supplier payments rise before customer invoices are settled. Combined with wider economic uncertainty, this can create a funding gap that restricts the growth the company is trying to achieve.

3. Product Awareness

Low Awareness May Be Suppressing Uptake

Research among UK businesses found that 59% had not heard of invoice finance. However, once the product was explained, 83% said they would recommend invoice finance to other businesses with cash flow issues. Businesses can recognise the potential benefit once it is explained, but low awareness remains a substantial obstacle to wider uptake.

4. Fees And Charges

Invoice finance charges are normally made up of:

Service charge or administration fee: normally a percentage of turnover.
Discount fee: a margin over Bank Base Rate charged on funding drawn.
Other charges: renewal and arrangement fees are considered here, but other ancillary charges are not included.

This analysis uses quotes FundInvoice sourced for clients over the four years preceding the report. Charges for bad debt protection and Bank Base Rate have been removed from the main cost comparison. The figures include service charges, discount margins and renewal fees where applicable. Estimated costs are based on projected turnover and anticipated funding use.

Range Of Fees Quoted

Invoice discounting	Range
Service charge or administration fee	0.3% to 2.7%
Discount margin over Bank Base Rate	2.25% to 3.25%
Factoring	Range
Service charge or administration fee	0.5% to 3.5%
Discount margin over Bank Base Rate	1.75% to 3.5%

The discount margin ranges exclude quotes that had no separate discount fee.

Total Cost As A Percentage Of Turnover

Invoice discounting	Figure
Average total cost	0.90% of annual turnover
Observed range	0.43% to 2.70%
Average including an assumed 4% Bank Base Rate	1.23% of annual turnover
Factoring	Figure
Average total cost	1.27% of annual turnover
Observed range	0.99% to 3.5%
Average including an assumed 4% Bank Base Rate	1.70% of annual turnover

The higher average factoring cost is unsurprising. Factoring includes a credit control service, which requires more work from the provider. Invoice discounting clients also tend to be larger and may command finer rates.

Bad Debt Protection

The additional charge for bad debt protection ranged from 0.3% to 0.8% of turnover, and 46% of the businesses in the analysis chose this additional cover.

Differences Between Quotes

For each business, we compared its cheapest quote with its most expensive. The average difference was 87% across all products. The smallest observed difference was 17%, while the largest was 348%. The variation was substantially greater for invoice discounting quotes than for factoring quotes.

Arrangement Fees

An arrangement fee was included in 54% of quotes. Where charged, it averaged the equivalent of 3.03% of the estimated total annual cost, excluding Bank Base Rate and bad debt protection.

5. Advance Rates And Funding

Prepayment rates averaged 88% of the sales ledger value across all invoice finance products.

Invoice discounting	Figure
Average prepayment rate	87% of the sales ledger
Observed range	80% to 95%
Factoring	Figure
Average prepayment rate	90% of the sales ledger
Observed range	85% to 100%

The results indicate a slightly higher average funding level for factoring facilities. One likely factor is the additional control a provider has when it handles credit control and communicates with debtors.

6. Service And Satisfaction

Customer Ratings

A relatively modest subset of the complete list of UK providers had verified customer reviews on independent platforms. Average ratings among these providers ranged from 4.9 out of 5 down to 1.5 out of 5. In some cases, reviews of other products may be included. Nevertheless, the range indicates substantial variation in customer experience and supports careful provider selection.

7. Sector Insights

Invoice finance is broadly applicable to businesses that sell to other businesses on credit terms, but some sectors use it more frequently. In previous research, we estimated that approximately 17% of recruitment companies used invoice finance, compared with the estimated 1% level across UK businesses generally.⁵ Recruiters often need to pay substantial staffing costs before clients settle invoices, and several providers specialise in this sector.

Manufacturing, services and transport are also regular users. Specialist facilities are available for sectors including construction and vehicle accident repair.

8. Emerging Trends

Technology And AI Integration

Artificial intelligence is beginning to play a visible role in invoice finance. Providers are testing AI-assisted credit assessment and fraud detection, while businesses are increasingly using AI to forecast cash flow. Our 2025 survey found that more than three-quarters of businesses were using AI or exploring its potential applications. Invoice finance may therefore become faster, more automated and more closely tailored to individual risk profiles.

Selective And Digital Platforms

Selective invoice finance and online funding platforms appeal to businesses that want flexibility or only wish to fund particular invoices. Fintech entrants, including those offering digital onboarding and rapid decisions, are encouraging established providers to modernise.

Competition And Provider Differentiation

Providers differentiate through sector specialisation, including construction, recruitment and logistics, and through customer service. The wide range of verified average customer ratings suggests that service quality may contribute to clients changing provider.

9. Expert Commentary

Invoice finance remains one of the most underused tools available to UK businesses. Despite ongoing late payment issues and widespread cash flow pressures, only around one percent of companies use these facilities, often because of low product awareness. That gap represents both a challenge and an opportunity. Better education and simpler access routes are needed if more firms are to benefit.

We continue to see significant variations in charges and advance rates between providers. For the average business, this can mean paying nearly double the cost, depending on the provider chosen. Our role as brokers is to help companies navigate that complexity, benchmark their current arrangements and secure terms that are genuinely competitive.

Looking ahead, technology and AI will almost certainly reshape how invoice finance is delivered. At the same time, service quality and provider reliability remain critical. The best outcomes come when businesses seek expert guidance, compare offerings across the market and avoid settling for the first option presented to them. For UK businesses, regularly benchmarking facilities is essential if they want to avoid overpaying.
Glenn Blackman, Managing Partner, FundInvoice LLP

10. How To Use This Report

This report is intended to be a practical reference point, helping readers understand where a business stands in relation to others and identify areas where better options may exist.

Business Owners

Compare your funding costs, advance rates and provider service levels with the benchmarks in this report.
Consider whether issues such as late payments and access to funding reflect your own experience.

If you are paying more, receiving less funding or experiencing poorer service than the benchmarks suggest, consider reviewing your current arrangement. If this report raises questions about your facility, or you think invoice finance may help your business, call FundInvoice on 03330 113622 or use our Invoice Finance Benchmark Checker.

Advisers And Introducers

Use the data to support conversations with clients about cash flow and funding.
Refer to the benchmarks when considering whether a client's facility is competitive.
Share headline findings to improve awareness of cash flow challenges and invoice finance as a possible solution.

Journalists And Researchers

The figures and trends provide a snapshot of the UK invoice finance market in 2025/6. Data drawn from FundInvoice's independent research may be cited with attribution to FundInvoice LLP and a link to this report.

Sources

FundInvoice LLP, Late Payment & Cash Flow Impact Survey, September 2025. Approximately 1% of respondents reported using some form of invoice finance to deal with cash flow gaps, consistent with our previous estimates.
UK Government Department for Business and Trade, Business Population Estimates for the UK and Regions 2024. View the statistical release.
FundInvoice LLP, List of UK Invoice Finance Providers. View the provider list.
FundInvoice LLP, AI, Business Challenges & Invoice Finance Survey, July 2025. View the survey findings.
FundInvoice LLP, East Sussex & Kent Recruitment Finance Survey, June 2016.

Download The UK Invoice Finance Benchmark Report 2025/6

Prefer to read or keep a copy offline? You can download the complete UK Invoice Finance Benchmark Report 2025/6 as a PDF:

Download the UK Invoice Finance Benchmark Report 2025/6 (PDF)

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Further Support

If you require further support regarding any of the issues raised in the report, please don't hesitate to contact us on 03330 113622.

You can also use our Invoice Finance Benchmark Checker to compare your own costs against our benchmark model.

Get Your Own Unique Report Generated

We can also produce a similar unique benchmark report for your particular niche. See this article for more information: Fixed Price Research Report Service.

By Glenn Blackman

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