Invoice Finance Costs & Rates

How much does invoice finance cost?

Invoice finance typically costs 0.2%–2.5% of funded turnover as a service fee, plus 1.5%–3% over the Bank of England base rate as a discount charge on the funds drawn. Selective facilities charge a single per-invoice fee instead. The exact cost depends on turnover, sector, customer quality and the type of facility. See our glossary of invoice finance terms for the language funders use.

The two charges that make up most of the cost

Almost every ongoing facility is priced with the same two components. The service fee is a percentage of your funded turnover, charged for running the facility, and with invoice factoring it also pays for the credit control service. Expect it towards the higher end of the range for factoring, where the funder is doing collections work, and towards the lower end for invoice discounting, where you are doing your own. The discount charge is the cost of the money itself, calculated like interest on the funds you have drawn, usually expressed as a margin over the Bank of England base rate and only charged on what you actually use. Two businesses with identical facilities can pay very different totals depending on how heavily they draw.

How that plays out in practice

Take a business invoicing £1 million a year with a 1% service fee, drawing an average of £100,000 at a discount charge of 2.5% over base. The service fee costs £10,000 a year, and with base at, say, 4% the discount charge costs around £6,500, so the facility runs at roughly £16,500 a year, about £1,375 a month. Weigh that against what it buys: the cash to trade and grow, and with factoring a credit control function that would cost far more as a salary. Pricing only makes sense in context, which is why headline rates alone tell you very little.

Full fee schedule: every charge you might meet

The table below sets out every fee type found in a typical invoice finance facility, the usual range, and when it applies. Not every provider charges every line, but this is the complete schedule we compare when we put two quotes side by side.

Last reviewed: 6 August 2026

How selective invoice finance is priced

Selective invoice finance works differently. There is usually no service fee and no ongoing commitment, just a single fee per funded invoice, calculated on the invoice value and how long the customer takes to pay. Per pound funded it costs more than a whole ledger facility, but in the months you fund nothing, it costs nothing. For occasional needs it is often the cheaper route overall despite the higher headline rate.

The small print charges to watch for

This is the section the industry would rather you skipped. Beyond the headline fees, facilities can carry minimum monthly or annual service fees that bite if your turnover dips, arrangement or set-up fees when the facility starts, audit fees for the funder's periodic reviews, same-day payment charges for CHAPS transfers, refactoring or collect-out charges on invoices that go seriously overdue, trust account charges on confidential facilities, non-utilisation fees if you draw less than expected, and notice periods with termination fees that make leaving expensive. None of these is inherently unfair, but together they can turn a cheap-looking headline rate into an expensive facility. When we compare providers, we compare the whole fee schedule, not the number on the front page.

What makes your price higher or lower

Funders price risk and effort. Your rate improves with higher turnover, since fees fall as volume rises, strong creditworthy customers, a well-spread ledger rather than one dominant debtor, clean invoicing with few disputes or credit notes, and sectors the funder understands and likes. It worsens with heavy customer concentration, contractual debt of the kind common in construction, messy paperwork and very small facilities, where minimum fees loom large. Some of these you can influence, and improving them before an application is one of the more valuable things a broker can tell you.

Is invoice finance expensive?

Compared with the cheapest secured bank lending, yes, invoice finance usually costs more. Compared with the alternatives actually available to most growing businesses, it is competitive, and compared with the cost of not having working capital, missed supplier discounts, turned-down orders, emergency borrowing, it is frequently a bargain. The honest answer is that invoice finance is expensive when it is the wrong product or the wrong provider, and good value when it is the right one. For a side-by-side comparison, read our guides on invoice finance vs a bank overdraft and invoice finance vs a business loan. Our job is making sure you end up in the second category.

How to pay less: compare before you commit

Providers quoting for the same business routinely come back with materially different totals, because each prices its own appetite. The single biggest saving available to you is not negotiating harder with one lender, it is being matched with the right one to begin with. We know how the providers on our panel price, we know where the minimum fees and notice periods sit, and we will show you the true cost comparison before you sign anything. Our service is free to use. The provider pays our commission, and we will always tell you that arrangement exists.