Penny Freedom review: spot invoice finance for UK businesses and sole traders

Penny Freedom is a UK provider of selective invoice finance, built around funding single invoices rather than a whole sales ledger. It works with both limited companies and sole traders. Smart Funding Solutions is an independent broker, so we can set Penny Freedom alongside the rest of the invoice finance market and help you see whether it is the right fit for the invoices you want to fund. You can read more on Penny Freedom's own website.

01About Penny Freedom

Penny Freedom is the trading name used by Penny Limited, a company registered in England and Wales and based in Ipswich. Its website says it has served more than 10,000 customers. The business is set up for owners who want quick access to cash tied up in unpaid invoices without signing up to a long facility.

Its pitch is flexibility. You pick which invoices to submit, get a quote online, and only use the service when you need it. Penny Freedom says new users can be funded within about 24 hours and established customers in as little as two hours, although timing on any particular invoice will depend on checks on you and your customer.

Penny Freedom is one of the lenders on our panel. Smart Funding Solutions is an independent broker and is not part of Penny Freedom.

02What Penny Freedom funds

Penny Freedom offers two versions of the same idea: turning an individual invoice into cash before your customer pays it.

Product	How it works	Who chases payment
Spot invoice finance (factoring)	You submit a single invoice and Penny Freedom advances funds against it. You can choose invoices one at a time.	Penny Freedom collects payment and manages contact with your customer on that invoice.
Confidential invoice discounting	Similar funding against chosen invoices, but your customer is not told that a finance provider is involved.	You keep the customer relationship and collect as normal.

If you want to understand the difference in more depth, our guide to selective invoice finance explains how single invoice funding compares with a whole ledger facility.

03Who Penny Freedom suits (and who it may not)

Penny Freedom is a natural fit for smaller businesses with occasional cash flow gaps caused by slow paying customers. Its website mentions construction, haulage and local authority contracts as typical examples, which makes sense: these are sectors where long payment terms are normal and one large invoice can tie up a lot of cash.

• Sole traders: many invoice finance providers only work with limited companies. Penny Freedom accepts sole traders, which widens the options for self employed contractors and tradespeople.
• Seasonal or lumpy income: because you choose which invoices to fund, you can use it in busy periods and leave it alone when cash is comfortable.
• Growing businesses: taking on a bigger contract often means paying staff and suppliers long before the customer pays. Funding the invoice can bridge that gap.

It may be less suitable if you want to fund your whole sales ledger every month. A full invoice factoring or discounting facility from a larger provider can work out simpler for businesses that raise many invoices and want a standing line of funding. It is also only useful if you invoice other businesses or public bodies on credit terms. If your sales are mainly cash, card or online, invoice finance is not the right tool.

Penny Freedom offers two versions of the same idea: turning an individual invoice into cash before your customer pays it.

04What Penny Freedom looks at

Penny Freedom says businesses need to be registered with HMRC, and it accepts both limited companies and sole traders across England, Scotland and Wales. Beyond that, single invoice funding usually depends far more on your customer than on you. Typically, a provider will want to see:

• A copy of the invoice and evidence the work or goods have been delivered.
• Details of the customer being invoiced, so their creditworthiness can be checked.
• Basic identity and business information, and bank details.
• For confidential discounting, a clearer picture of your trading history and how you collect payments.

A strong, reliable customer such as a large company or a public body will usually make an invoice easier to fund than one from a small business with patchy payment habits. Disputed invoices, invoices for work not yet finished, or contracts with retentions are harder to fund and are worth discussing up front.

05Pros and cons

• Pro: choose individual invoices, with no need to commit your whole ledger.
• Pro: sole traders as well as limited companies can apply.
• Pro: quick turnaround once you are set up, according to the provider.
• Pro: a confidential option is available if you would rather your customer did not know.

• Con: paying per invoice can cost more over a year than a whole ledger facility if you use it constantly.
• Con: with spot factoring, the provider contacts your customer, which some owners prefer to avoid.
• Con: limited to B2B invoices on credit terms; it will not help with other cash needs.
• Con: each invoice is assessed on its own, so funding is not guaranteed every time.

06Applying through a broker vs going direct

You can go straight to Penny Freedom online, and for a one off invoice that may be all you need. The case for comparing first is that invoice finance pricing and terms vary widely, and the cheapest route for a single invoice is rarely the cheapest for regular use. A business that finds itself funding most invoices may be better off with a small whole turnover facility, or a different selective provider that suits its sector.

When you come to us, we look at how often you invoice, who your customers are and how quickly you need cash, then we search the market and approach suitable lenders on your behalf. You make one enquiry rather than filling in several forms, and we explain the trade-offs in plain English. It is free to enquire; any broker fee is disclosed separately before you proceed. The quickest way to start is our instant quotes tool, which lets you compare lenders in minutes.

07Alternatives to Penny Freedom

• Kriya: another well known name for selective invoice finance, often worth comparing for limited companies that want an online process.
• Sonovate: focused on recruitment and contractor businesses, so a better match if you place temporary workers or consultants.
• Bibby Financial Services: a long established provider that suits businesses ready for a full factoring or discounting facility across the ledger.

If most of your invoices go to main contractors, our page on construction invoice finance covers the extra issues such as applications for payment and retentions.