Two charges in the quote.
Rather more on the invoice
Everybody compares the service charge. Almost nobody adds the discount charge to it, and practically nobody asks about the other seven — which is how a facility quoted at “0.5%” ends up costing several times that.
No credit check to enquire.
Four of these are in the quote. The rest you have to ask for
- The service charge, on turnover
A percentage of everything you put through the facility, not of what you borrow. Lower for discounting than factoring, because with factoring you are also buying the credit control. The difference, priced.
- The discount charge, and it moves without anyone telling you
Interest on the money you have actually drawn, and it is almost always quoted over Bank Rate rather than as a fixed number. Bank Rate is 3.75% as at 10 October 2026, with the next decision on 5 November, so “base plus 4%” means 7.75% today and something else after that. Check the current rate before you compare two quotes written in different months.
- A minimum service charge, which is the one that bites
Most facilities set a floor on the service charge whether you use them or not. Forecast £800,000 of turnover, put through £400,000, and you can still be billed as though you hit the forecast. Ask what the minimum is and what happens in a quiet quarter.
- Then the list nobody volunteers
An arrangement fee to set it up. A survey or audit fee, sometimes annually. A refactoring fee if an invoice runs past its due date. A same-day transfer fee each time you draw. A non-recourse premium if you want bad debt cover. And a termination fee if you leave inside the minimum term.
Ask us for the total, not the headline. We will get every fee out of them in writing.
Get my options
What a facility costs over a year
A business invoicing £600,000 a year to other businesses, drawing about £50,000 at any one time. Illustrative, to show the shape of the bill rather than to quote anybody.
Discount charge shown at Bank Rate plus 4% — 7.75% on the 3.75% Bank Rate at 10 October 2026. Illustrative throughout, and it excludes survey, refactoring, same-day transfer and termination fees, because those depend on how you use the facility. The point of the table is the last two rows.
- The headline is roughly a third of the real number. Quoted 0.5%, paying 1.4% of turnover. Neither figure is wrong; they measure different things, which is exactly why comparing two facilities on the service charge alone tells you almost nothing.
- A base rate move changes your cost with nobody writing to you. On £50,000 drawn, a quarter-point rise is about £125 a year. On a facility drawing £500,000 it is £1,250. Worth knowing which way you are exposed.
Common questions
What is a typical invoice finance rate?
As two numbers, not one. A service charge is commonly a fraction of a per cent of turnover for discounting and rather more for factoring, and a discount charge is usually quoted over Bank Rate. Anyone giving you a single percentage for invoice finance is quoting one of the two and leaving the other out.
Does the discount charge change when the Bank of England moves?
Yes, and that is the normal structure — the charge is set as a margin over Bank Rate, so it moves when Bank Rate moves without the provider renegotiating anything. Bank Rate was 3.75% on 10 October 2026. A fixed discount rate exists but is rarer and usually priced for the privilege.
What is a minimum service charge?
A floor on what you pay in service charges over a period, whether or not your turnover justifies it. It protects the provider against a facility that was sized for a bigger business than you turned out to be. It is also the fee most likely to surprise you in a quiet quarter, so ask for the number and the period it is measured over.
What is a refactoring fee?
An extra charge when an invoice goes unpaid past an agreed point, often 90 days, and the provider has to keep chasing it. It is charged on top of the service charge, and on a ledger with slow payers it adds up quietly.
What does it cost to leave?
Potentially a great deal. Notice periods of three to twelve months are standard, there is often a minimum term underneath that, and leaving early can trigger a termination fee on top. More facilities are regretted over this clause than over the rate, and it is the first thing we read.
Is it cheaper than a business loan?
Over one short gap, almost identically priced — our worked example puts them about six pounds apart. Over a year the answer turns on how much of your turnover goes through the facility, because the service charge is levied on all of it. Priced side by side.
Ask for the total, not the headline
Give us your ledger and your terms, and we will come back with every fee each provider charges, in writing, so you can compare the thing that actually matters.
Get my optionsWhere to next
Invoice finance Back to the hubBe paid now for invoices your customers will settle later.Factoring vs discountingWho collects, who finds out, and the same invoice priced both ways.What a loan costsReal cost ranges, the fees, and what moves your price.Invoice finance vs a loanSix pounds apart over the same sixty days. The difference is shape.