Francis Wilks & Jones is the country’s leading firm of debt and invoice finance lawyers. We regularly advise both invoice financiers and borrowers on all aspects of asset based lending.

Our team has decades of experience advising on asset based lending, debt and invoice finance matters. We act for financiers and borrowers giving us a 360 view of the industry and the legal issues which arise from it.

What is invoice financing?

Invoice finance is a type of asset based lending, where the financier purchases the unpaid debts (outstanding invoices) owed to a business for up to 90% of the face value of each invoice when the invoice is raised. When the customer pays the invoice, the financier takes back the amount advanced and their fee and then pays the business the difference.

Invoice financing means that a business can receive payment for its invoices before they are due, providing your business with working capital while you wait for your customers to pay their debts.

There are two types of invoice finance:

  • factoring
  • invoice discounting

When invoice finance is combined with another form of business financing, it is referred to as asset based lending. 


Factoring is where the provision of invoice finance is disclosed to the debtor. The invoice finance provider purchases debts owed to a company, tells the debtor that this has occurred and then takes over the collection of those debts.

Invoice discounting

Invoice discounting is where the invoice finance provider purchases debts owed to a company but the collection of those debts remains with the company. The purchase of the debts by the invoice financier can be either disclosed to the debtor – disclosed invoice discounting – or not disclosed to the debtor – undisclosed invoice discounting otherwise known as confidential invoice discounting. 

Asset based lending

Asset based lending is the name given for a financial facility that usually includes invoice finance (typically undisclosed invoice discounting) together with the provision of another type of lending.

This may be a loan against:

  • property
  • plant and machinery
  • stock (inventory)
  • work in progress;
  • a cash flow or term loan
  • bad debt protection
  • a combination of any or all of these – whatever the asset base that the company owns comprises and can be financed

Advantages of invoice finance

Invoice finance provides cash flow finance sooner than a company would otherwise receive it because invoices are by and large paid to the company as they arise, not when the debtor pays (which can be some time later).

Combined with other facilities asset based lending can enhance that benefit.

Whatever the benefit, it is important that the business, its directors and shareholders understand the nature of the product and how an invoice finance facility works. Properly used, invoice finance can be hugely beneficial to the running of a company.

With decades of experience advising asset based lenders and businesses, our business funding team is here to help. Call us today.

Key contacts

Kieran Cummins

Kieran Cummins


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