Last updated: 13 Aug 2026

Invoice discounting

Invoice discounting lets you release the cash tied up in your unpaid invoices, while you keep control of chasing payment yourself and your customers stay unaware a lender is involved.

  • See what you could raise against your unpaid invoices

  • Get an advance of up to 90% of invoice value 

  • Keep your own credit control in house

  • Compare offers from a panel of lenders, with support from a dedicated funding specialist

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What is invoice discounting?

Invoice discounting is a type of invoice finance where you borrow against your unpaid invoices while keeping day to day credit control and collections in house, so your customers carry on paying you as normal. Your lender advances you most of an invoice's value upfront, and once your customer settles it in full, you receive the remaining balance minus their fees. It suits businesses that already have a credit control process in place and would rather keep their customer relationships entirely in their own hands than hand collections to a lender.

How does invoice discounting work?

Invoice discounting follows a repeating cycle once your facility is in place.

  1. You deliver the work and raise the invoice. Your business supplies the goods or service as normal and sends the invoice to your customer.

  2. You submit a copy of the invoice to your lender. This can often be done automatically if your accounting software is connected.

  3. Your lender advances you a percentage of the invoice value. This is typically up to 90%, usually reaching your account within 24 to 48 hours of approval.

  4. You continue collecting payment from your customer as normal. Payments are usually paid into an account held in your business's name, so nothing looks different to your customer, while your lender holds security over the funds until their advance is repaid.

  5. Your lender releases the remaining balance, minus their fees. Once the invoice is settled in full, you receive what is left after the discount rate and service charge have been deducted.

Why get invoice discounting?

  • Confidential from day one

    Your customers keep paying you directly, so your facility stays invisible while you keep full control of your own credit control process.

  • Lower fees for an established credit control process

    Since you keep collecting payment yourself, service charges on invoice discounting are typically lower than invoice factoring.

  • Funding that grows with your sales

    The more you invoice, the more you can typically raise, so your facility scales with your business.

How much does invoice discounting cost?

The cost of invoice discounting depends on your turnover, how many customers you invoice, their payment history and the size of your facility. The table below shows what to expect across the Capitalise lender panel.

Cost element

Typical range

Advance rate

Up to 90% of invoice value upfront, some lenders advance 80% to 85%

Service charge

Around 0.2% to 0.5% of turnover, lower than factoring since you keep credit control

Discount rate

Around 1.5% to 4% a year, depending on lender and risk

A stronger business credit score and customers with a reliable payment history usually bring your service charge and discount rate down, since your lender is taking on less risk.

What types of invoice discounting are available?

  • Confidential invoice discounting is the standard approach. Your customers continue paying you directly and are never made aware a lender is involved

  • Disclosed invoice discounting names your lender on invoices or remittance requests, though you still collect payment yourself rather than your lender chasing it

  • Whole turnover discounting finances your entire sales ledger on an ongoing basis, giving continuous access to funding as you invoice

  • Selective invoice discounting lets you choose individual invoices or customers to finance rather than your whole ledger

If handing collections to a lender entirely would suit your business better than keeping credit control in house, invoice factoring may be the better option. 

Which businesses use invoice discounting?

  • Established recruitment and staffing agencies

    Cover payroll between placing candidates and getting paid by the client, while keeping the client relationship entirely in their own hands.

  • Manufacturers and wholesalers with an established finance team

    Free up cash tied up in stock and materials while keeping supplier and customer relationships entirely in house.

  • Import and export businesses managing longer payment terms

    Keep control of collections across international customers while unlocking cash tied up in longer 60 to 120 day terms.

  • Businesses that have outgrown a business overdraft

    Release more funding than a fixed overdraft limit allows, without a lender ever contacting your customers directly.

Am I eligible for invoice discounting?

Most lenders on the Capitalise panel assess your business against the following.

  • Your business trades B2B, invoicing other businesses rather than consumers

  • You have an established credit control process already in place, since you keep managing collections yourself

  • Your customers typically pay within 30 to 90 days of invoicing

  • You have some trading history, though minimum requirements vary by lender

What documents do you need to apply for invoice discounting?

Having these documents ready will help speed up your application:

  • Your aged debtor report or sales ledger, showing outstanding invoices and their due dates

  • 6 months of business bank statements

  • Your latest set of filed annual accounts, if available

  • Details of your main customers, including how long you have worked with them

  • Proof of ID for each business director

How do I apply for invoice discounting with Capitalise?

  • Green circle with a white number "1" in the center.

    Tell us about your business

    We'll ask about your turnover, your customers and how much you typically have outstanding on unpaid invoices.

  • Green circle with white number "2" in the center.

    Get matched with lenders

    Your application is matched against our panel of invoice discounting lenders who fit your business profile.

  • Green circle with the white number 3 in the center.

    Speak to a funding specialist

    A dedicated specialist talks you through confidential, disclosed, whole turnover and selective options, so you choose the facility that fits how you work.

  • White number 4 on a solid green oval background.

    Lenders review your application

    Your funding specialist sends your application to multiple matched lenders, who assess your invoices and customers before making an offer.

  • White number 5 centered on a green circular background.

    Accept an offer and draw down funds

    Once approved, your first advance can reach your account within 24 hours.

What are the advantages and disadvantages of invoice discounting?

  • Advantages

    • Your customers are never contacted by your lender, so your facility stays invisible to the businesses you invoice.

    • Service charges tend to sit well below invoice factoring rates, since you're taking on the collections work yourself.

    • There's no third party managing communication with the businesses you invoice, so your existing terms and rapport stay exactly as they are.

    • Your invoices themselves secure the funding, so you don't need to put up other business or personal assets.

  • Disadvantages

    • Invoice discounting isn't well suited to a business without an existing collections function, since chasing payment stays with your team.

    • Lenders tend to look for a more established sales ledger before offering discounting, since they're relying on your own credit control rather than theirs.

    • Unlike factoring, your team still spends time chasing payment, which is worth weighing up if freeing up that time matters to you.

    • Your lender assesses the creditworthiness of the businesses you invoice, so a customer with a poor payment history can affect what you're offered.

Invoice discounting vs invoice factoring: what's the difference?

The main difference between invoice discounting and invoice factoring is who deals with your customers day to day.

Feature

Invoice discounting

Invoice factoring

Who collects payment

You, keeping your own credit control

Your lender, directly from your customers

Confidential from customers

Usually yes, discounting is confidential

Usually no, factoring is disclosed

Credit control support

Stays with your business

Included as part of the facility

Typical service charge

Around 0.2% to 0.5% of turnover

Around 0.5% to 3% of invoice value or turnover

Best suited to

Businesses with an established credit control process

Businesses that want funding and credit control support together

Both options release a similar advance rate and speed of funding, so the choice usually comes down to whether you would rather keep credit control in house or hand it to your lender.

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Get invoice discounting for your business

If unpaid invoices are holding your cash flow back, invoice discounting turns what you're already owed into funding you can use now.
Compare offers from multiple lenders, and get support from a dedicated funding specialist from application through to your first advance landing in your account.

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