Glossary
Invoice Financing
Invoice financing is a form of working capital funding that allows businesses to unlock cash tied up in unpaid invoices before the payment due date arrives. Instead of waiting 30, 60, or 90 days for customers to pay, businesses access a percentage of the invoice value immediately, bridging the gap between delivering goods or services and receiving payment.
What It Is
In B2B trade, payment terms create a structural cash flow problem. A business completes work, issues an invoice, and then waits. During that waiting period, it still has to pay staff, restock inventory, service debt, and fund growth. Invoice financing solves this by treating approved invoices as a liquid asset, one that can be converted to cash within 24–48 hours rather than weeks or months.
Invoice financing is a broad term that encompasses several related products (including invoice discounting and factoring), which differ primarily in whether the business retains control of its sales ledger and whether the arrangement is disclosed to the end customer. What they share is the same fundamental mechanic: receivables become immediate cash.
For suppliers in a supply chain finance program, invoice financing can mean the difference between a healthy cash conversion cycle and a working capital squeeze that constrains growth.
How Invoice Financing Works
Goods or services delivered: the business completes work and issues an invoice to its customer with agreed payment terms (e.g. net-60)