UK business-to-business finance illustration · Illustrative example
Price the early cash from a £100,000 invoice
Invoice finance changes timing and introduces a funding cost.
Money in
Invoice face value: £100,000
Money out
Business receives: £80,000 now + £17,947.95 later
£2,052.05 funding cost; no extra revenue
- £100,000 × 80% = £80,000 advance now
- £1,000 + (£80,000 × 8% × 60/365) = £2,052.05 total charges
- £20,000 reserve − £2,052.05 = £17,947.95 paid later
Hypothetical: customer pays after 60 days; 80% advance; 1% invoice fee; 8% simple annual finance rate; VAT excluded; no other fees; charges deducted from reserve; recourse applies.
Late or failed payment can increase cost or require repayment. This is an illustrative price, not an available offer.
Steps
- Validate invoice
- Review finance terms
- Compare full cost
- Reconcile collection
Documents
- Invoice and customer record
- Written finance terms
- Collection and reserve statement
My brief
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Sources
- Protecting cash flow and working capital, British Business Bank
- Finance Finder, British Business Bank
