Invoice financing is a facility that allows businesses to borrow money against unpaid invoices. It has become increasingly popular as a way to bridge gaps caused by slow customer payments.
With an invoice finance facility, a lender approves a financing limit, and the business can receive up to 95% of the value of approved unpaid invoices. Once the customer pays the invoice, the advance is settled, and the remaining balance—minus any fees—is credited back. Interest is charged only on the borrowed amount for the outstanding period, helping businesses manage expenses and make growth decisions. This facility is also known as Invoice Discounting.