Invoice Finance Statistics UK 2026

This guide pulls together the most useful UK invoice finance numbers and trends. It focuses on what business owners and finance teams want to know, market size, typical funding levels, costs, and who uses invoice finance most.

If you are comparing invoice finance with other working capital options, this article will help you benchmark what “normal” looks like in the UK market.

Most published datasets group invoice finance with asset-based lending. That matters because many headlines use the combined label IF/ABL. In this article, I explain what the combined figures mean and how to apply them to your own cash flow.

Quick UK invoice finance stats you can quote in 2026

If you need a fast snapshot for a report, a pitch deck, or a board meeting, start here.

• £310 billion in annual client turnover was financed via IF/ABL in 2022, a record and about 8% above the 2018 peak of £287 billion.
• That 2022 total was a 12% increase on 2021, which sat around £277 billion.
• By late 2023, annual sales supported by IF/ABL rose to over £315 billion.
• Total advances outstanding reached nearly £21 billion by Q1 2023.
• Of that outstanding funding, about £8 to £9 billion sat with SMEs (firms with turnover up to £25 million).
• SME advance balances in 2023 held just above £8 billion per quarter, roughly flat year on year at about +2.2%.
• Factoring is used by about one-third of client businesses, while about two-thirds use invoice discounting.
• Typical advance rates sit at 80% to 90%, with 80% to 85% a common benchmark. Some low-risk cases can reach 95%+.
• Many providers price invoice finance using a service fee of around 0.1% to 0.5% of invoice value or turnover, plus interest at base rate + 2% to 4%.

What invoice finance is, and what the stats usually include

Invoice finance is a way to unlock cash tied up in unpaid invoices. You deliver work, you invoice the customer, and you wait. Invoice finance reduces that wait.

If you want a simple definition and examples, see the British Business Bank guide on invoice finance.

The provider advances part of the invoice value. When the customer pays, the provider takes its fees and releases the rest.

Invoice discounting vs factoring

Invoice discounting is funding only. You keep control of your sales ledger. Your customer may not know you are using a finance provider.

Factoring includes a service. The provider can handle collections and credit control. This can suit firms that want support chasing payments, or that need help tightening processes.

Why IF/ABL appears in many datasets

UK market reporting often groups invoice finance with asset-based lending. That grouping can include other secured lending products, not just invoices.

Still, the combined figures are the best public view of the market. They show the scale of working capital funding linked to business assets. For a plain-English market overview, see UK Finance on invoice finance and asset-based lending.

UK market size and growth, what has changed since 2020

Invoice finance became more important after the pandemic. Many firms faced volatile demand, supply chain shocks, and higher costs. They needed flexible working capital.

Turnover financed is in the hundreds of billions

In 2022, UK Finance members financed a record £310 billion in client turnover through IF/ABL. That beat the pre-pandemic peak of £287 billion in 2018. It also marked a 12% increase on 2021, which was around £277 billion.

By late 2023, annual sales supported by the market rose to over £315 billion. That is why many commentators call the sector a mainstream funding route, not a niche product.

Outstanding advances show how much cash is in play

Turnover financed is a flow number. It tells you how much sales activity the sector supports over a year. Advances outstanding are a stock number. They show how much money is currently advanced against invoices and other assets.

By Q1 2023, total advances outstanding reached nearly £21 billion. About £8 to £9 billion of that sat with SMEs. The rest supported larger corporates.

The 2020 dip, and the rebound

Covid-19 caused a clear slump. Average advances outstanding to SMEs fell from about £9.1 billion in 2019 to £6.1 billion in 2020. That is roughly a one-third decline.

As the economy reopened, demand returned. By mid 2022, SME advance levels had almost regained pre-pandemic highs. They were up about 69% from the Q2 2020 low point and only about 6% below the last pre-Covid quarter.

In 2022 the recovery accelerated, with SME advances 24% higher through Q3 2022 than at the end of 2021.

2023 stability, then steady growth to 2026

By 2023 the market levelled off. SME advance balances in Q1 to Q3 2023 held just above £8 billion per quarter. That was roughly flat year on year, at about +2.2%.

The number of businesses using these facilities was also stable in the same period. That points to a mature market that is still growing, but not exploding.

Industry forecasts point to moderate expansion into 2026. Provider revenues are projected to rise at around 3% to 4% per year, reaching about £4.0 billion in 2024 to 2025. The expectation is steady growth through 2025 and 2026, driven by ongoing demand for working capital.

If you want a wider view of UK small business funding trends, the British Business Bank publishes the Small Business Finance Markets report.

Factoring vs invoice discounting, which is bigger in 2026

Invoice discounting dominates in the UK. It is used by larger firms and by SMEs that want control of collections.

In the UK, factoring is now a minority product by user count. It is used by roughly one-third of client businesses, while about two-thirds use invoice discounting.

Because discounting is popular with larger clients, its share of total balances is even higher than its share of user count. Put simply, fewer discounting clients can still account for more pounds advanced.

Still, factoring remains important. Over 10,000 UK businesses rely on traditional factoring arrangements. It is not disappearing, it is specialising.

When factoring is still the right choice

Factoring fits when the service matters as much as the cash. That tends to happen when:

• You have many customers and a small finance team.
• Your sector has long payment terms and frequent disputes.
• You want help tightening credit control and collections.
• You need bad debt protection bundled in.

Typical advance rates in the UK, how much of an invoice you can unlock

Advance rate is the percentage of an invoice you can draw before the customer pays. It is one of the first numbers people ask about.

In the UK, a common advance rate is 80% to 90%. An 80% to 85% advance is a frequent benchmark.

In low-risk cases, some arrangements can reach 95%+. In higher-risk cases, or for new clients, the advance can be closer to 70% to 80%.

Why advance rates vary

Providers look at risk. The main factors are:

• Debtor quality. Strong, well known buyers tend to attract higher advance rates.
• Invoice ageing. If your invoices often go past terms, the provider may hold more back.
• Disputes and credits. Frequent disputes reduce confidence in the ledger.
• Customer concentration. If one customer makes up most of your sales, the provider may cap exposure.

Invoice finance costs in 2026, what the data suggests

Costs matter because invoice finance is not a flat rate. It has moving parts. The main two are the service fee and the discount rate (interest on funds drawn).

Service fees

For whole turnover facilities, the service fee is often a percentage of sales volume. Typical ranges sit around 0.1% to 0.5% of each invoice, or a similar percent of annual turnover.

Discount rates and interest margins

The discount rate is usually linked to the Bank of England base rate, plus a margin. In 2023, typical margins sat around 2% to 4% over base rate. With base rate elevated at that time, that translated to roughly 7% to 10% annual interest.

If you want to sense-check quotes, you can check the current Bank Rate and then add the margin your provider offers.

In 2026, the base rate may be different. The key point is the margin. If the provider quotes base plus 3%, you can estimate your total interest cost once you know the current base rate.

All-in cost as a percentage of invoice value

When you combine the fee and the interest, effective costs are often around 1% to 5% of invoice value. Larger SMEs with high volume tend to sit at the low end. Smaller firms and one-off deals tend to sit higher.

Real examples based on turnover

Published benchmarks show how pricing can shift with size:

• A business with £3 million turnover might pay about 1.3% of turnover per year for discounting.
• A business with £1 million turnover might pay about 2.8% to 3.2% of turnover per year for an invoice finance facility.
• Small one-off factoring deals can land around 3% to 5% per invoice on certain transactions.

Bad debt protection adds a premium

Some facilities include bad debt protection, also called non-recourse or limited recourse. That protection can add an extra premium. Benchmarks put that premium around 0.3% to 0.5% of turnover.

A simple cost sanity check

Ask your provider to show the effective annual percentage cost on a typical draw. Then ask the same question on a worst case draw, when invoices run late. You want to see both.

Facility sizes and how much SMEs typically use

Invoice finance scales. That is one reason it can beat a fixed term loan for fast growing firms.

Minimums and maximums

Some providers will finance as little as £1,000 per invoice under selective factoring. At the other end, the government Covid schemes allowed facilities up to £10 million per business.

Average outstanding balances per SME

Average balances give you a sense of what a typical user looks like. UK Finance data indicates the average outstanding balance per SME using IF/ABL was about £245,000 in mid 2022.

That was up from about £138,000 at the height of the pandemic. It was also close to pre-pandemic norms, around £243,000 in early 2020.

By late 2022, the average even reached a record £256,000, as larger SMEs made up a bigger share of the client base.

What these averages mean for you

Do not treat the average as a target. It is just a reference point. Many micro businesses finance far less, while mid market firms can hold seven figure balances.

Who uses invoice finance in the UK, size bands and business age

Invoice finance is used across the SME spectrum, but it has a clear sweet spot.

The traditional sweet spot, £1 million to £25 million turnover

Companies with annual turnover in the £1 million to £25 million range make up a large share of the client base.

Within that group, the largest SMEs, those with £10 million to £25 million turnover, have driven growth. In 2022, this segment saw a 15% year on year increase in user count, reaching about 3,400 users. By Q3 2022, those businesses made up 21% of all SME IF/ABL clients, up from 18% before the pandemic.

Micro and small businesses, long decline then a 2023 bounce

Smaller firms have historically been less likely to use invoice finance. The number of small firms in the £0.5 million to £5 million turnover range using invoice finance fell each year from 2018 through 2021.

The £500,000 to £1 million turnover cohort shrank by 43% in user count from 2009 to 2022. That shows a long-term shift away from external finance for some very small firms.

In 2023, the picture started to change. In Q1 to Q3 2023, the sub £1 million turnover segment saw advances jump 34% year on year, the largest increase of any size group. Digital platforms and selective invoice funding played a role, since they can serve smaller ledgers at lower cost.

Business age, most users are established

Research suggests the average age of firms using invoice finance is about 15.5 years. Most users have been trading for over a decade. That makes sense, since invoice finance works best when you have a stable base of business customers and a track record of invoicing.

Sector hotspots in 2026, where invoice finance is most common

Invoice finance is strongest in sectors with long payment terms and large receivables. These are sectors where you can be profitable on paper but still short on cash.

Four sectors can account for most activity

One analysis found that in 2020, 60% of invoice finance loans from one lender went to just four sectors:

• Administrative and support services
• Wholesale and retail trade (B2B segments)
• Manufacturing
• Construction

Why these sectors lean on invoice finance

These sectors share one feature, they sell on credit to other businesses. They often face net 30, net 60, or net 90 terms. Construction subcontractors can wait 90 days or more. Recruitment agencies must pay wages weekly while clients pay in 30 to 60 days.

A sign of change, retail and wholesale client numbers surged in 2022

UK Finance data showed an uptick in retail sector clients. The number of IF clients in the retail and wholesale trade category increased 44% in 2022, comparing Q3 2022 to the end of 2021. It reached the highest level on record. That likely reflects firms rebuilding stock and smoothing cash flow as supply chains reopened.

Export and international trade, a smaller but important segment

Export businesses use invoice finance too. The key difference is risk. Cross-border invoices can carry higher default risk and slower collections, so credit insurance matters.

UK Finance reported that export and import factoring volumes dropped during the pandemic. They hit a series low, down 32% as global trade was disrupted. Volumes have been recovering as trade normalised.

If you sell overseas in 2026, ask providers about:

• Currency handling and settlement times
• Debtor risk limits by country
• Whether credit insurance is required
• How disputes are managed across borders

Regional trends, invoice finance is not just a London product

London is a big market because it has many B2B firms. Still, invoice finance is widely used across the UK.

Example split from a fintech lender

In Q1 to Q3 2020, one fintech lender reported that London companies accounted for 37% of the amount it lent via invoice finance. The Midlands followed at about 18%, and the South West at about 16%.

Broader picture across the UK

British Business Bank analysis finds that debt finance usage, which includes invoice finance, is reasonably well spread across the UK. Regions with strong manufacturing bases, like the Midlands and North West, often show strong uptake. Regions with construction and services also show steady usage.

Risk and performance in 2026, defaults, utilisation, and protection

Invoice finance is secured and self-paying. In simple terms, the funding is linked to invoices that should turn into cash. That structure helps keep default rates low compared with unsecured lending.

Bad debt protection is common

A significant subset of facilities include bad debt protection. These are non-recourse or limited recourse structures, where the lender or insurer absorbs the loss if a debtor does not pay.

Utilisation stayed below 50% in 2022 and 2023

UK Finance data shows that throughout 2022 and into 2023, average utilisation of IF/ABL facilities stayed well under 50% of total limits on average. Many clients had headroom.

At the end of Q1 2023, SMEs were using only about 48% of their overdraft limits, and similar sub 50% utilisation was seen for invoice finance lines. That slack helped keep stress low in the portfolio.

What this means for SMEs

Lower utilisation can be a sign of prudence. It can also be a sign that firms are using invoice finance as a flexible buffer, not a last resort. For a new applicant, this is a positive signal. It suggests providers have capacity and confidence when underwriting is strong.

When invoice finance is a good fit, the evidence from SME behaviour

Invoice finance is best when your cash flow is constrained by trade credit terms. That is the core pattern in the data.

Cash flow is the main driver

In 2020, 78% of SMEs who sought finance said cash flow support was the reason. That aligns with how invoice finance works, it shortens the time between sale and cash.

Growth is a common outcome

In one survey, 87% of users said invoice finance enabled them to grow faster. This is why high growth firms often consider invoice finance even when they are profitable.

Awareness is rising

In 2022, awareness of IF/ABL among SMEs rose and sat 10 percentage points higher than pre-Covid levels. That suggests more founders and finance teams now understand the product and when to use it.

How to use these 2026 stats to pick the right invoice finance provider

Stats are useful, but only if they help you decide. Here is how to turn market numbers into a better provider shortlist.

1) Match the product to your process

If you have tight credit control and you want confidentiality, discounting often fits. If you want help with collections, factoring can be worth the fee.

2) Ask for the advance rate rules, not just the headline

An 85% headline rate is only helpful if you know how reserves work. Ask:

• What happens when an invoice goes past terms?
• What is the customer concentration limit for one debtor?
• What invoices are excluded, for example disputed invoices?

3) Compare pricing with an all-in scenario

The data shows common components, service fees and a margin over base rate. Ask for a worked example that matches your average payment terms. Then compare providers on the same assumptions.

4) Understand add-ons and premiums

Bad debt protection can be valuable, but it adds cost. If you already have trade credit insurance, check how it interacts with the facility.

5) Look for a provider that can scale

The UK market has moved toward discounting and digital platforms. That reflects a need for speed and flexibility. Choose a provider that can grow with your sales, and that can handle spikes in invoices without delays.

6) Protect yourself with strong terms

Invoice finance is a contract. Read it closely. Pay attention to:

• Notice periods and exit fees
• Audit rights and reporting requirements
• What triggers a reduction in advance rate
• How disputes are handled

If you are ready to compare providers, start with our guide to the best invoice financing lenders in the UK.

If invoice finance is not the right fit, review other options in our working capital loans hub and our guide to how to get a business loan in the UK.

For a simple comparison of security and risk, see secured vs unsecured business loans. If a lender asks for one, learn how personal guarantees work.

Is invoice finance the same as a loan?

It is a form of borrowing, but it is tied to invoices you have already raised. The facility usually grows with sales, which can make it feel different from a fixed loan.

Does invoice finance work for small businesses?

It can. The market data shows small firms used it less for many years, but digital and selective products helped micro businesses grow usage in 2023. The key is having B2B invoices and reliable customers.

How fast can you get money?

Speed varies by provider and by how clean your invoicing process is. If your ledger is organised and your debtor list is clear, onboarding can be faster. Always ask for the timeline from application to first draw.

Will my customers know I use invoice finance?

Not always. Many discounting facilities are confidential. Factoring is more likely to involve customer notifications, since the provider may manage collections.

What is the biggest risk for the business?

The biggest risk is process risk. If invoices are disputed, raised late, or not backed by clear contracts, the provider can withhold funding. Good invoicing and clear terms with customers reduce this risk.

Where can I find official market information?

Two good places to start are UK Finance’s market resources and the British Business Bank’s research pages. See: UK Finance invoice finance and asset-based lending, and the Small Business Finance Markets report.

Final takeaway

In 2026, invoice finance sits at a historic high in the UK. The market finances hundreds of billions in turnover and keeps around £21 billion advanced at any moment. For SMEs, the key number is the £8 to £9 billion advanced to firms under £25 million turnover.

Most users choose invoice discounting, but factoring still supports thousands of firms. Typical advances sit around 80% to 90%, and pricing often combines a small service fee with interest at base rate plus a margin.

If you sell B2B on 30, 60, or 90 day terms, these stats are not just trivia. They are proof that invoice finance is a mainstream cash flow tool. Used well, it can help you grow without waiting for customers to pay.

Want help deciding? You can also read how asset finance can boost cash flow and compare it with invoice funding for your business model.

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