Selective and spot invoice finance
Get paid early on just the invoices or customers you choose, instead of your whole sales ledger. Useful for occasional cash gaps and smaller businesses, but each invoice costs more than a full facility.
- Secured on invoices
How it works
With factoring or invoice discounting, you usually finance all your invoices on an ongoing basis. Selective and spot invoice finance let you choose:
- Selective invoice finance: you finance the invoices of chosen customers.
- Spot factoring: you finance a single invoice, or a few, when you need to.
The finance company advances most of the invoice value, then pays you the rest, minus its fees, when the customer pays. You manage your other invoices as normal.
A traditional invoice finance facility is generally not right for businesses with a turnover under about £300,000. Selective or spot finance can work for them. Most providers want customers who pay within 30 to 90 days.
Upsides and downsides
Upsides
- Choose which invoices to finance, and only when you need to
- No long-term contract or minimum fees across your whole ledger
- Can work for smaller businesses that a full facility would not suit
- Quick, often within days
Downsides
- Costs more per invoice than a full factoring or discounting facility
- Only helps with invoices to creditworthy business customers
- Customers may learn you are using finance
Risks
- Having to repay the advance if the customer does not pay (with recourse)
- Damaging a customer relationship if collection is handled badly
What it costs
- How it is priced
- A fee for each invoice financed, usually a percentage of its value
- Costs that are easy to miss
- Per-invoice fees, usually higher than on a whole-ledger facility
- Charges if the customer pays late or does not pay (with recourse)
- Your customer may find out, if the provider collects the payment
Most of the value of the invoices you choose to finance.
Have a quote? Cost of invoice finance: work out a typical year's fees
Does it fit?
Could fit when
- You invoice business customers and occasionally need cash before they pay
- You are a smaller business, below the size where a full invoice finance facility makes sense
Unlikely to fit when
- You need cash against most of your invoices all the time (a full facility is usually cheaper)
- Your customers usually take more than 90 days to pay
Who can use it
- Business types: Sole trader, Partnership, Private limited company, LLP, Public limited company, Community interest company, Co-operative or community benefit society
- Needs sales (revenue)
- Only for businesses that sell to other businesses
- You must invoice other businesses or public bodies on credit
- Your customers should usually pay within 30 to 90 days
- Providers check the credit of the customers whose invoices you finance
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all asset-based and specialist lending
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- Invoices to finance
- Customer details
- Aged debtors report
Regulation and protections
Invoice finance is commercial finance, which is not generally subject to statutory conduct regulation in the UK. Providers that are UK Finance members follow its Invoice Finance and Asset-Based Lending Standards Framework.
Types of provider: Specialist invoice finance companies; Online invoice finance platforms; Some banks.
Also consider
Sources
- British Business Bank: Invoice finance · checked 7 October 2026
- UK Finance: The Standards Framework for Invoice Finance and Asset-Based Lending (January 2025) · checked 7 October 2026