Invoice finance

Whole turnover invoice finance: funding your entire sales ledger

How whole turnover invoice finance works, how it compares with selective funding, what lenders assess, costs and security, and how we arrange it.

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In short

Whole turnover invoice finance is a facility where a business assigns its entire sales ledger to a funder, which advances a percentage of every approved invoice, typically around 80% to 90%, as invoices are raised. The balance, less charges, is paid when customers settle. Funding grows with sales, but there is usually a minimum term and notice period, and fees apply to the whole ledger.

This page is for owner-managed and established businesses that invoice other businesses on credit terms and want working capital that grows automatically with sales, rather than funding one invoice at a time. Whole turnover invoice finance assigns your entire sales ledger to a funder, which then advances money against every approved invoice as you raise it. Smart Funding Solutions is a broker, not a lender. We approach lenders on our panel of 300+ and arrange facilities from around £10,000 to £500,000+, with larger facilities available in suitable cases. For an overview of every invoice-based option, start with our invoice finance hub.

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What is whole turnover invoice finance?

Whole turnover invoice finance is a facility in which a funder buys, or lends against, all of your eligible trade invoices on an ongoing basis, not just the ones you choose. It is sometimes called whole-ledger finance. Once the facility is live, each new invoice you raise to an approved customer is notified to the funder, added to the ledger and becomes available to draw against, usually up to a set percentage of its value.

The mechanics are straightforward:

You raise an invoice to your customer in the normal way and upload it, or a schedule of invoices, to the funder.

The funder makes a prepayment, typically around 80% to 90% of approved invoices, into your bank account. Specialist recruitment funders can go higher.

Your customer pays on its usual terms, either into an account controlled by the funder or into a trust account.

The funder releases the balance of the invoice to you, less its charges.

Because every invoice feeds the facility, the amount available rises as turnover rises and falls back in quieter months. That is the central difference from selective invoice finance, where you pick individual invoices or customers to fund and leave the rest of the ledger untouched.

Factoring or discounting: two ways to run a whole-ledger facility

Whole turnover is a scope, not a single product. It can be delivered in two ways:

Factoring. The funder runs the sales ledger and credit control, chasing customers for payment. It is usually disclosed to customers and suits smaller and younger businesses that want the collection work handled. See our page on invoice factoring.
Invoice discounting. You keep your own credit control, and the arrangement is usually confidential. It is typically cheaper but needs more turnover, a trading record and good ledger controls. See our page on invoice discounting.

Our guide to invoice factoring vs invoice discounting explains how to choose between the two.

Who whole turnover invoice finance suits

Whole turnover invoice finance suits businesses with a steady flow of invoices to creditworthy business customers, where cash is tied up in debtors almost all the time. Typical examples include:

Wholesalers and distributors paying suppliers on shorter terms than their customers pay them.
Manufacturers whose turnover moves with production and order intake, where a facility that flexes with sales avoids constant renegotiation. Read our manufacturer invoice discounting case study, where we arranged £400,000 for a manufacturer with a strong order book and cash tied up in debtors.
Labour-based businesses such as recruitment, cleaning, security and facilities management, where wages go out weekly and customers pay on 30 to 60 day terms.
Transport, logistics and business services companies invoicing large customers on standard terms.
Growing businesses that have outgrown an overdraft and need funding linked to sales rather than to fixed security.

When it is usually not the right fit

Businesses selling mainly to consumers, or taking payment at the point of sale.
Very occasional invoicing, or a single large contract, where selective finance or a short-term business loan may be cheaper overall.
Ledgers made up mainly of construction applications for payment, retentions and pay-when-paid terms. Only some funders have appetite here; see construction invoice finance.
Ledgers dominated by one customer, which may need a specialist approach such as a facility built for high customer concentration.

How long it typically takes to set up

A whole turnover facility typically takes from around one to four weeks to set up, depending on the lender, the size of the ledger and how quickly information is supplied. Indicative terms can come within a few working days in straightforward cases. After that, most funders carry out a survey or audit of your ledger and systems, verify a sample of invoices with customers, and complete legal documents.

Things that tend to slow a deal down include a large or complex ledger, overseas customers, existing lenders whose charges need a waiver or priority agreement, and the need to give notice on an existing facility. Moving from one funder to another is common and can usually be arranged so that the new facility repays the old one on day one. Once live, funds against new invoices usually arrive quickly, often the same or next working day after upload, depending on the funder's processes.

Security and personal guarantees

The main security for whole turnover invoice finance is the debtor book itself, assigned to or held for the funder, usually backed by a debenture over the company. Funders commonly ask for:

Assignment of debts. The legal right to the invoices you raise.
A debenture. A fixed and floating charge over the company's assets, registered at Companies House. Our guide to debentures and fixed and floating charges explains how these rank.
Warranties and indemnities. Many funders ask directors for a limited guarantee covering breaches of the agreement, such as invoices that are not genuine or payments diverted. Some also ask for a broader personal guarantee. Read our guide to personal guarantees before agreeing to one.

It also matters whether the facility is recourse or non-recourse. Under a recourse facility, if a customer does not pay within an agreed period, the funder takes the money back from you. Non-recourse, or bad-debt protection through credit insurance, transfers some of that risk away, usually at extra cost and within credit limits set for each customer.

How the costs are structured

Whole turnover invoice finance usually has two main charges: a service fee and a discount charge. Pricing depends on turnover, ledger quality, the level of service and the lender, so we do not quote figures here, but you should understand how each element works.

Service fee. A percentage of the invoices you assign, covering administration and, with factoring, credit control. Because it is charged on the whole ledger, it applies whether or not you draw down against every invoice.
Discount charge. Interest on the money you actually draw, usually a margin over Bank of England base rate, calculated daily. Drawing less, or customers paying sooner, reduces it.
Other charges. Minimum monthly or annual fees, same-day payment fees, audit or survey fees, fees for disapproved invoices, credit insurance premiums and costs for leaving early or during a notice period.

The minimum fee is the charge most often overlooked. If your turnover falls below the level the facility was priced on, you may pay the minimum regardless. Our invoice finance calculator helps you model how much cash a facility could release, and our guide on how much invoice finance costs goes through each charge in detail.

Alternatives to whole turnover invoice finance

If committing the whole ledger does not suit you, several other forms of working capital may do the job.

Selective invoice finance: fund only the invoices you choose, with no whole-ledger commitment.
Confidential invoice finance: for businesses that want customers unaware of the arrangement.
Asset-based lending: combines debtors with stock, plant and sometimes property in one larger facility.
Revolving credit facility: a flexible limit not tied to individual invoices.
Trade finance: pays suppliers before you invoice, which invoice finance cannot do.
A working capital loan: a fixed sum repaid over an agreed term.

Underwriting

What lenders assess

Lenders assess the quality of your debtor book first and the strength of your business second, because the invoices are their main security. In practice they look at:

Customer quality

The creditworthiness of the businesses you invoice, how promptly they pay and whether any are in dispute or financial difficulty.

Debtor spread

How much of the ledger is owed by your largest customers. Concentration limits restrict how much of the book can be owed by any one customer, and invoices above that limit may not be funded in full.

Invoice terms and evidence

Whether work is complete when you invoice, whether customers can set off amounts against what they owe you (contra trading), and how you evidence delivery.

Dilution

The level of credit notes, discounts and disputes, which reduces the value the funder actually collects.

Turnover and trading record

Lenders band facilities by turnover. Invoice discounting in particular usually needs a track record and higher turnover; factoring is more accessible to younger businesses.

Financial health

Recent accounts, management information, any HMRC arrears and existing borrowing, especially charges already registered over the business.

Systems and controls

For confidential facilities, whether your accounting software and credit control processes are reliable enough for the funder to rely on your reporting.

Checklist

Documents lenders usually ask for

Most lenders ask for a standard pack that lets them understand your ledger, your trading and the people behind the business. Having it ready usually shortens the process.

An aged debtor report and aged creditor report, ideally dated within the last few weeks
A list of your main customers with their typical payment terms and recent sales to each
Two or three years of filed accounts, plus recent management accounts
Recent business bank statements
Sample invoices, customer contracts or terms of business, and proof of delivery where relevant
Details of any existing invoice finance facility and the notice required to leave it
Details of existing debentures or other charges over the company
Identification for directors and, where guarantees are requested, personal asset and liability information

A transaction we arranged

£250,000

Payroll every week. Customers paying in 45 to 60 days.

A growing recruitment agency needed funding that moved with its debtor book, not another fixed loan. We arranged confidential invoice finance.

Profitable growth can still create a cash-flow problem when wages are paid long before customers settle invoices.

Read the transaction

Sector: Recruitment
Structure: Confidential invoice finance
Outcome: Completed

Pros and cons of a whole-ledger facility

The main advantage of whole turnover invoice finance is funding that grows with sales; the main drawback is the commitment of the whole ledger for a minimum term.

Advantages

Working capital rises automatically as turnover grows, without new applications.
Usually a lower cost per pound of funding than spot facilities for businesses that draw consistently.
Available confidentially through invoice discounting for businesses that qualify.
Optional credit control and bad-debt protection can reduce administration and risk.
Security is mainly the debtor book, so property is not usually required.

Disadvantages

A minimum term and notice period limit your flexibility to leave.
Service fees and minimum fees apply even in months you need little funding.
Concentration limits and ineligible invoices can make the available funds lower than the headline percentage suggests.
With factoring, customers deal with the funder, which some businesses prefer to avoid.
Ongoing reporting, audits and verification add administration.

Side by side

Compare your options

How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.

Option	How you repay	Security	Often used for
Unsecured business loan	Fixed instalments, usually monthly	No charge over assets; a personal guarantee is usually required	Growth, stock, tax bills and cash flow
Secured business loan	Fixed instalments, often over a longer term	A charge over property or other assets	Larger sums, property and refinancing
Revolving credit facility	Interest on what you draw; repay and redraw	Varies by lender and case	Recurring or uneven cash flow gaps
Merchant cash advance	A share of future card takings	No charge over assets	Card-taking businesses with uneven months
Asset finance	Regular payments over the life of the asset	The asset being financed	Equipment, vehicles and machinery
Invoice finance	Settled as customers pay their invoices	Your unpaid invoices	Businesses waiting on customer payment

General information only. Every lender has its own criteria, and all finance is subject to status.

Whole ledger vs selective invoice finance

Whole ledger finance commits your entire sales ledger to one funder for a minimum term, while selective finance lets you fund chosen invoices with no whole-ledger commitment. Most businesses that invoice regularly end up weighing these two against each other, so the table sets out how they usually differ in practice. Exact terms depend on the lender and the case.

Feature	Whole turnover facility	Selective (spot) facility
Invoices funded	All eligible invoices to approved customers	Invoices or customers you choose
Commitment	Minimum term, often 12 months, plus a notice period, often 3 months	Often none beyond each funded invoice
Funding level	Grows with turnover within an agreed limit	Limited to the invoices you put forward
Cost structure	Service fee on whole turnover plus a discount charge on money drawn; minimum fees common	Charge per invoice funded; typically higher per invoice but nothing paid on unfunded sales
Confidentiality	Available as confidential discounting for businesses that qualify	Often disclosed, though some funders offer confidential options
Credit control	Handled by the funder (factoring) or by you (discounting)	Usually you, with the funder collecting the funded invoices
Best fit	Regular, predictable B2B invoicing where funding is needed month after month	Occasional cash gaps, one large contract, or a few slow-paying customers

A simple rule of thumb: if you would want to fund most of your invoices most of the time, a whole-ledger facility is usually more efficient. If you only need cash against a handful of invoices a year, paying a service fee on the whole ledger rarely makes sense, and selective finance is the more natural starting point.

The broker’s view

How we help

We start by looking at your debtor book, your customers and how much funding you need month by month, then tell you honestly whether a whole-ledger facility, a selective facility or something else is likely to suit you better. If whole turnover makes sense, we prepare your information, approach lenders on our panel with appetite for your sector and ledger, and compare offers on the things that matter: prepayment level, concentration limits, service fee basis, minimum fees, term and notice period, recourse terms and security. If you already have a facility, we can also review whether a move would improve your terms. Lenders make every credit decision. It is free to enquire; any broker fee is disclosed separately before you proceed. To start, contact us or apply online.

FAQs

Questions clients ask

Can I exclude some customers from a whole turnover facility?

Sometimes. Funders may agree to carve out a specific customer or division, for example a customer that pays by card or an overseas account they cannot fund. Others insist on the whole ledger. Excluded customers are usually agreed at the outset and written into the agreement, so raise any you want to keep outside the facility before terms are issued, not after.

What happens to the facility if my turnover drops?

Your available funding falls with your ledger, because prepayments are calculated on the invoices outstanding. The facility limit itself usually stays in place. The point to watch is the minimum fee: if turnover falls well below the level assumed when the facility was priced, you may pay the minimum regardless. Some funders will review the minimum if a fall is long-term.

Can I move my whole-ledger facility to a different funder?

Yes, switching is common. The new funder typically pays off the existing one on completion and takes over the ledger. You will need to serve notice under your current agreement, so check the notice period and any early termination charge first. Timing the switch to the end of a minimum term usually avoids extra cost.

Do I need to be a limited company?

Not always. Many funders work with limited companies and limited liability partnerships, and some will fund sole traders and partnerships, usually through factoring rather than confidential discounting. The structure affects what security is available and how guarantees are framed, so it is worth telling us your legal form at the start.

Will my customers know about a whole turnover facility?

With factoring, usually yes: invoices carry a notice of assignment and the funder chases payment. With confidential invoice discounting, customers normally keep paying into an account in your name and are not told. Funders may still verify a sample of invoices discreetly, often presented as an audit check or handled under your own name.

Official guidance

Relevant transactions

More deals like this

£400,000Manufacturing

Bigger orders won. £400K released from the debtor book.

Materials and wages had to be paid long before customers settled. Invoice discounting gave a facility that rose with the debtor book.

Invoice discountingRead the transaction

£500,000Wholesale and distribution

Short supplier terms. Long customer terms. £500K to close the gap.

A distributor paid suppliers quickly but waited on its largest customers. Confidential invoice discounting linked funding to sales.

Confidential invoice discountingRead the transaction

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