How much does invoice finance cost?
Invoice finance normally has two main costs: a service fee for operating the facility and a discount charge calculated on the funding actually used.
The true price also depends on monthly minimums and any arrangement, audit, payment or bad-debt-protection charges. Go-Factor compares every element so directors can see the real annual cost not simply the headline rate.
What Are the Two Main Invoice Finance Costs?
Charged as a percentage of eligible turnover or as an agreed monthly amount. Factoring may have a higher service fee because it normally includes sales-ledger and credit-control support.
Calculated on the funds actually used, normally on a daily basis. It is similar to overdraft interest and is not usually charged against the complete facility limit.
What Could Invoice Finance Cost in Practice?
Consider a business with £1 million of eligible annual turnover and average invoice-finance use of £100,000:
- Illustrative service fee at 0.75%: £7,500 a year.
- Illustrative discount rate at 4.5% a year: £4,500.
This equals 1.2% of annual turnover before additional charges where applicable. It is an illustration of the calculation, not a funding quote or guaranteed rate.
What Is a Monthly Minimum Charge?
A provider may set a minimum service fee payable each month. If the calculated service fee is lower than that minimum, the business pays the minimum amount.
For example, if the calculated service fee is £90 but the monthly minimum is £100, the business pays £100 not £90. The additional cost that month is £10.
If the calculated charge reaches £130, the £100 minimum does not normally sit on top of it. The business pays £130.
Go-Factor checks whether the minimum is monthly, quarterly or annual, how quickly it increases and whether it remains realistic against expected turnover. A low headline service fee can become expensive when the minimum charge is set too high.
Which Other Charges Should I Check?
- Arrangement and documentation fees.
- Audit or survey charges.
- Payment, transfer or CHAPS fees.
- Minimum monthly or annual service fees.
- Credit-limit and bad-debt-protection charges.
- Refactoring or overdue-invoice charges.
- Legal, security, termination or notice-period costs.
Not every provider applies every charge. Go-Factor checks the complete fee schedule and converts competing proposals into a clear annual-cost comparison.
What Determines the Price?
- Eligible turnover and expected growth.
- Average funding use and customer payment speed.
- Customer quality and debtor concentration.
- The number of customers and invoices being managed.
- Whether credit control or bad-debt protection is included.
- The sector, contracts and invoicing process.
Standard pricing assumes genuine B2B invoices for completed and accepted goods or services. Consumer sales, disputed invoices and incomplete work are not normally suitable. Construction applications, stage payments and retentions require specialist assessment.
Can Go-Factor Reduce My Existing Costs?
Yes. Go-Factor can review an existing factoring or invoice-discounting facility, benchmark the service fee, discount charge, monthly minimum and additional costs, and negotiate better pricing or terms where suitable alternatives are available.
Moving provider is an established process. Read Go-Factor’s guide to switching invoice finance providers .
You can also explore Go-Factor’s invoice finance , invoice discounting and single-invoice finance guidance.
Should I Approach Every Invoice Finance Provider?
No. Sending the same enquiry to every funder can slow the funding journey, trigger unnecessary calls and create conflicting information. It may also prevent Go-Factor from using parts of its panel where a provider has already recorded the first direct approach or introduction.
Speak to Go-Factor first. We will assess the requirement, present it correctly and approach a focused shortlist of funders with the right appetite. This protects your time and creates a cleaner, stronger pricing comparison.
Go-Factor insight: The best-value facility provides the right usable cash at the lowest complete cost. Go-Factor compares service fees, discount rates, monthly minimums, reserves and additional charges so directors know exactly what they will pay—and what funding they can genuinely use.
HMRC confirms that the finance charge applied to funding used under a factoring arrangement may be described as a discount, discount charge or discounting charge. Read the HMRC technical explanation .
Find the True Cost of Your Invoice Finance
Send Go-Factor your proposed quotation or existing facility statement. We will compare the complete cost, identify avoidable charges and negotiate with suitable providers.
Request Your Funding Cost ReviewPricing and funding remain subject to application, invoice eligibility, provider assessment, approval and agreed terms.
