Invoice finance criteria and eligible invoices
The three pillars of eligibility
B2B Transactions
You must invoice other businesses or the public sector. B2C (consumer) sales cannot be financed.
Credit Terms
Invoices must be raised on standard credit terms (typically 14 to 90 days). Point-of-sale transactions do not qualify.
Completed Work
Goods must be delivered or services fully rendered. Invoices for future work or unapproved milestones are ineligible.
What makes an invoice 'eligible'?
Not every invoice on your ledger can be funded. Lenders assess individual invoices against strict criteria before applying their advance rate.
Usually eligible:
- Standard invoices to UK-based businesses with good credit scores.
- Export invoices to approved countries (requires specialist export finance).
- Invoices backed by a clear paper trail (signed purchase orders, delivery notes, or timesheets).
Usually ineligible (Disallowances):
- Aged debt: Invoices older than the agreed funding period (usually 90 days past invoice date).
- Contra accounts: Invoices to a customer who is also your supplier (they may offset the debt).
- Inter-company debt: Invoices raised to another business owned by the same directors.
- Sale or return: Goods supplied on a sale-or-return basis.
- Stage payments: Applications for payment or milestone invoices where the final contract is not yet complete (unless using specialist Construction Finance).
Red flags that can prevent funding
High debtor concentration
If one client represents 80% of your revenue, most lenders will decline a whole-ledger facility. You need a selective facility.
Contractual bans on assignment
If your customer contracts strictly prohibit the assignment of debt to a third party, standard factoring will not work.
Outstanding statutory demands
Unresolved winding-up petitions or severe, unmanaged HMRC arrears will stop a facility from being approved.
High credit note dilution
If you frequently issue credit notes to correct invoicing errors, lenders view the ledger as high-risk and unreliable.
Documents to prepare for application
- A detailed aged debtor report (who owes you money, and how old the debt is).
- A detailed aged creditor report (who you owe money to).
- Latest full financial accounts and year-to-date management accounts.
- 3 to 6 months of consecutive business bank statements.
- A sample paper trail for your largest customer (Purchase Order → Invoice → Proof of Delivery).
- Details of any existing crown arrears (HMRC/VAT) and agreed payment plans.
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Frequently asked questions
Common questions from UK businesses about eligibility.
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