Cash flow pressure is something every business owner understands. You deliver the work, raise the invoice, and then wait sometimes 30, 60, even 90 days to get paid. Meanwhile, payroll, tax and supplier bills don’t wait.
That’s where invoice finance comes in. But not everyone realises that you don’t have to sign a long-term contract to unlock your cash.
You can actually finance a single invoice quickly, flexibly, and often without any credit checks.
How Traditional Invoice Finance Works
Invoice finance (sometimes called invoice factoring or invoice discounting) lets your business draw funds against unpaid invoices. Rather than waiting for your customers to pay, you can access a percentage of that money immediately.
Here’s how it typically works:
You raise an invoice for your customer.
The finance provider advances around 70–90% of that invoice’s value, usually within 24–48 hours.
When your customer pays, the remaining balance (minus the lender’s service fee) is released to you.
Depending on the structure, your customer might pay the lender directly (factoring) or pay you as normal (invoice discounting). Both release valuable working capital that would otherwise be tied up for weeks.
Factoring vs Invoice Discounting: What’s the Difference?
Both factoring and invoice discounting fall under the umbrella of invoice finance. They work on the same principle, turning unpaid invoices into immediate working capital, but differ in how payments are managed and who interacts with your customers.
| Feature | Factoring | Discounting |
|---|---|---|
|
Who collects payment |
The finance provider collects payments directly from your customers. |
You retain full control of collections and customer communication. |
|
Customer visibility |
Customers are aware a finance partner is involved (disclosed). |
The arrangement is usually confidential, customers continue to pay you as normal. |
|
Administration |
The funder manages credit control, reminders, and allocations. |
Your internal finance team continues to manage the ledger. |
|
Ideal for |
Businesses that prefer external credit control and admin support. |
Businesses that want to maintain client contact and confidentiality. |
In practice, both structures provide access to similar levels of funding.
The difference lies in control, reporting, and eligibility, which depend on factors such as:
The strength and consistency of your sales ledger.
The credit quality of your customers.
Your trading history and internal finance processes.
The level of oversight preferred by the funder.
These factors determine what type of facility, and what level of flexibility, your business qualifies for.
Confidential vs Non-Confidential Facilities
This refers to whether your customers know that a finance provider is involved.
Confidential: The facility operates entirely in the background. You issue invoices and collect payments as usual, your customers are unaware that a finance partner is supporting your cash flow.
Non-Confidential (Disclosed): Your customers are notified that payments should go to the finance provider. This is more common where the lender handles credit control directly.
At Finspire Finance, we can arrange both confidential and disclosed facilities, including confidential spot factoring, meaning you can fund one or several invoices without any change to your client relationships.
Introducing Single-Invoice Finance (Spot Factoring)
For many businesses, cash flow challenges aren’t constant; they’re occasional. You might need funding after a large project, during a seasonal dip, or while waiting for a few slow-paying customers.
That’s where single-invoice finance, also known as spot factoring, comes in.
Instead of committing your entire sales ledger, you can choose one invoice, upload it through a simple online portal, and release up to 90% of its value within 24 hours.
When your customer pays, you receive the balance minus a one-time fee.
How Credit Limits Work in Spot Factoring
One of the main differences between single-invoice funding and traditional invoice finance is how credit limits are set.
In spot factoring, credit limits are determined by the strength of your customer, not your business.
Each debtor (customer) is given an individual credit limit based on their creditworthiness and payment history.
For example:
You might have a £1 million credit limit for invoices raised to a large, reputable company.
But only £20,000 for invoices issued to a smaller or less established client.
This approach works perfectly if you deal with a few well-known, financially strong companies, or if you only need funding occasionally.
However, if your business itself has a strong financial track record and a broad, stable client base, you may prefer a facility where limits are based on your own ledger strength and performance.
That’s where traditional invoice finance becomes more powerful.
Instead of funding decisions being made per debtor, your overall facility grows with your turnover and trading history, making it ideal for companies with consistent invoicing and a proven performance record.
Just as Simple, But Far More Flexible
Funding a single invoice is just as straightforward as managing a traditional facility.
You simply upload the invoice, verify the debtor details, and wait for approval. Once approved, funds usually land the same day.
The key difference is freedom.
You’re not tied into minimum volumes, monthly charges, or long-term commitments, you fund only what you need, when you need it.
And because the facility is underwritten based on your customer’s credit rating, there are no credit checks on your own business.
It’s a quick, flexible way to access working capital without impacting your credit profile or existing finance lines.
Traditional vs Single-Invoice Finance: Side by Side
| Feature | Traditional Invoice Finance | Single-Invoice (Spot) Finance |
|---|---|---|
|
Term |
Typically locked in for 12+ months |
Only the duration of each invoice |
|
Advance Rate |
80-90% |
70-90% |
|
Underwriting |
Based on your business, personal, and ledger strength |
Based on the strength of your customer |
|
Credit Limits |
Determined by your business performance and ledger size |
Determined on a per debtor basis by debtor strength |
|
Credit Checks |
Standard due diligence and credit checks |
Usually not required |
|
Customer Visibility |
Confidential & disclosed available |
Confidential & disclosed available |
|
Funding Speed |
Setup = 1-3 weeks, drawdown thereafter within 24 hours |
Setup and drawdown within 24 hours |
|
Ideal For |
Regular invoicing, steady turnover, and businesses requiring an invariable credit limit |
Ad-hoc needs or strong debtor relationships |
When to Use Each
Traditional Invoice Finance
Best suited if:
You raise invoices regularly and have consistent turnover.
You want a revolving line of credit that grows with your sales ledger.
Your business has an established track record and strong internal processes.
You prefer facility limits based on your own performance, not individual customers.
Single-Invoice Finance
Ideal if:
You need funding occasionally or for specific invoices.
You work with financially strong, reputable clients.
You want quick access to cash without a long-term commitment.
You’d benefit from debtor-based credit decisions rather than business-based underwriting (poorer credit rating).
Finspire Finance: Your Partner in Both
Whether you need the stability of a long-term invoice finance facility or the flexibility of spot factoring, Finspire can arrange both.
As an FCA authorised commercial finance partner, we work with the UK’s most trusted lenders and finance providers to design facilities tailored to your business model, sector, and cash-flow rhythm.
We focus on structure, not sales, ensuring every facility supports your growth strategy and matches your commercial objectives.
