What is selective invoice finance?
Selective invoice finance, also known as spot invoice finance or single invoice finance, allows a business to finance individual invoices on a case-by-case basis. Rather than entering a whole-ledger factoring or discounting facility that covers all your invoices, you choose which specific invoices to fund and when.
This is ideal for businesses that do not want an ongoing commitment to a finance provider, or for those that only need occasional cash flow support rather than a continuous facility. The advance rate, fees and terms are typically agreed on a per-transaction basis.
When is selective finance the right choice?
Selective invoice finance tends to suit businesses with irregular invoicing patterns, such as project-based businesses, consultancies, or contractors that raise large invoices infrequently. It is also popular with businesses that have one or two very large customers who pay on long terms, creating a predictable but periodic cash flow gap.
For businesses with consistently high invoice volumes, whole-ledger factoring or discounting is usually more cost-effective. Selective finance typically costs more per invoice than a whole-ledger arrangement, reflecting the lower volume and the administrative cost to the provider of assessing each invoice individually.
Benefits and drawbacks
The main benefit is flexibility. You are not tied to a long-term facility agreement, and you only pay fees on the specific invoices you choose to fund. There are no minimum usage requirements and you retain full control of the rest of your sales ledger.
- Fund only the invoices you choose, with no whole-ledger commitment
- No long-term facility agreement or minimum monthly usage
- Ideal for project-based or seasonal businesses
- Faster set-up than a full factoring or discounting facility
- Higher per-invoice cost than whole-ledger arrangements
Eligibility
- UK limited company or sole trader
- B2B invoices only, for completed goods or services
- Minimum invoice value requirements vary by provider (typically £5,000+)
- Creditworthy debtors (your customers' payment history matters)
Frequently Asked Questions
How is selective invoice finance different from a factoring facility?
With selective finance you choose individual invoices to fund on a transaction-by-transaction basis, with no ongoing commitment. A factoring facility covers your entire sales ledger continuously under a formal agreement.
Is selective invoice finance more expensive?
On a per-invoice basis, yes. Selective finance typically costs between 2% and 5% of the invoice value, compared to a whole-ledger arrangement which often works out cheaper as a percentage of turnover for high-volume businesses.
How long does it take to receive funds?
Once your application and invoice are approved, funds are typically transferred within 24 to 48 hours.