Invoice finance definition

With regard to invoice finance definition, what it actually means is the assignment of invoices to a bank or financier who in turn, then owns those invoices but makes an immediate prepayment up to an agreed percentage e.g. 80% or 90% against the value of any invoices notified to it. That enables a business who may be struggling to get paid on time within its own standard payment terms to get cash very quickly from the bank or finance company.

The financier who then owns the debts would normally chase the debts from the end customer if it is a standard factoring arrangement. However, there are other types of invoice finance in the country such as invoice discounting or confidential factoring where the credit control function is retained within the business.

However, central to all invoice finance agreements is the assignment of present and future book debts (i.e. invoices) to the finance company or bank and this is all set out in the standard finance facility agreements which would be entered into at the time of the finance facility becoming operational.

Contact the invoice finance experts today

For more information with regard to invoice finance definition and invoice finance generally, contact one of our experts at Francis Wilks & Jones. We are one of the very few law firms with genuine expertise in this area and our team has decades of experience between it dealing with all types of invoice finance related work.