Single invoice finance vs a whole-ledger facility

When a business first looks at raising cash against unpaid invoices, it usually meets two very different shapes of deal. One is single invoice finance, sometimes called spot factoring, where you pick one invoice or one customer, get funded against it, and walk away with no ongoing commitment. The other is a whole-ledger facility, where every invoice you raise is assigned to the funder under a rolling contract. Both release cash locked up in your sales ledger. They suit very different businesses, and picking the wrong one is an expensive way to learn the difference.

This piece walks through how each is priced, when a one-off spot deal is the smart move, when a full facility wins, and how many businesses sensibly start on spot and graduate to a whole-ledger arrangement once their need becomes steady.

What single invoice finance actually is

Single invoice finance lets you choose exactly which invoice to fund. You might have a £50,000 invoice to a large, creditworthy customer on 60-day terms, and you need that cash now to cover payroll or buy materials for the next job. You assign that one invoice, receive the bulk of its value up front, and when your customer pays, the balance is released to you minus the fee. Nothing else on your ledger is touched, and there is no long contract, no notice period and no obligation to come back next month.

Selective invoice finance sits in the middle. Rather than one invoice at a time, you nominate a chosen group of customers or invoices to fund on an ongoing basis, while keeping the rest of your ledger to yourself. It gives you some of the repeatability of a facility without assigning everything.

What a whole-ledger facility actually is

A whole-ledger facility, whether structured as factoring or invoice discounting, funds your entire sales ledger. As you raise invoices, they are assigned to the funder and you draw down against the agreed percentage, usually 85% to 90% of value. The arrangement runs on a contract, typically 12 months with a notice period of one to three months, and it often carries a minimum fee so the funder earns a baseline return whether you draw heavily or not. In return you get the cheapest cost per pound funded, a facility that grows as your sales grow, and, with factoring, a credit control function that takes collections off your plate.

Cost per pound funded: the core trade-off

Spot finance is priced for convenience and for the funder taking on a one-off risk with no volume to spread costs across. Expect a single flat fee on the invoice value, commonly in the region of 2% to 5% for a 30 to 60 day period, depending on the debtor, the sector and the size of the invoice.

A whole-ledger facility is priced in two parts. A service fee, charged as a percentage of turnover, usually 0.5% to 3%, and a discount fee on the funds you actually draw, quoted as a margin over the Bank of England base rate. Spread across a year of invoices, the effective cost of funding any single invoice inside a facility is far lower than the spot price for that same invoice.

Spot finance buys you freedom by the invoice. A whole-ledger facility buys you a cheaper rate by the year. You are really choosing which one your cash flow can afford to pay for.

A worked example: funding a £50,000 invoice

Say you have a £50,000 invoice, payable in 45 days, to a solid customer.

• On a spot deal at a flat 3.5% fee, funding that one invoice costs £1,750. You receive around £47,500 up front and the balance on payment, less that fee. You pay nothing else and you owe the funder nothing further.
• Inside a whole-ledger facility, assume a 0.9% service fee on turnover and a discount margin that works out near 9% a year on drawn funds. The service fee on that £50,000 is £450. Drawing roughly £42,500 for 45 days at 9% costs about £471 in discount fee. Total cost for that invoice is around £921.

So the same invoice costs roughly £1,750 on spot against roughly £921 inside a facility, close to half the price. The catch is that the facility charges that service fee across every invoice all year, and it may hold you to a minimum fee. If you only genuinely need to fund the occasional large invoice, the facility can end up costing more overall despite the lower per-invoice rate.

When a one-off spot deal is the smart choice

Spot finance earns its keep in specific situations rather than as a standing arrangement.

1. A single large invoice has landed and the cash gap is short. You need this one payment early and nothing more.
2. Your work is lumpy or project-based. Income arrives in irregular chunks, so a facility with a monthly minimum fee would charge you in the quiet stretches for funding you are not using.
3. You want to test invoice finance before committing. A spot deal lets you feel the mechanics, the advance rate and the funder relationship with no contract to unwind.
4. You have one customer who pays slowly while the rest pay on time. Fund that customer and leave the healthy part of your ledger alone.

When a whole-ledger facility wins

Once the need becomes steady rather than occasional, the maths flips in favour of the facility.

• You are consistently waiting on 30 to 90 day terms across many customers and need reliable, repeatable working capital.
• You want the lowest cost per pound funded and can put enough volume through to make the service fee worthwhile.
• You want back-office support. With factoring, the funder runs credit control and collections, freeing your team from the admin of following up payment.
• You are growing and want a facility that scales with turnover automatically, so funding rises as your invoicing does without renegotiating every time.

Starting on spot and graduating to a facility

These two options are not a permanent fork in the road. A common and sensible path is to begin with single invoice deals when cash needs are occasional, then move to a whole-ledger or selective facility once the pattern becomes predictable. The spot deals prove the model, build a track record with a funder, and buy time while your ledger matures. When you find yourself funding invoices most months, that is the signal that a facility, with its lower rate and collections support, will cost less and cause less friction than repeated one-off arrangements.

How to decide

The honest answer usually comes down to frequency and predictability. If your need is sharp, occasional and tied to specific large invoices, spot finance keeps you free and unlocks cash fast. If your need is steady and spread across the ledger, a whole-ledger facility gives you a materially cheaper rate and takes work off your desk. Selective finance is worth a look when the truth sits in between.

Because pricing, advance rates, minimum fees and notice periods vary a great deal between funders, it pays to compare offers rather than take the first one. As a commercial finance broker that is not regulated by the FCA, which is correct for business to business invoice finance, we work across the specialist invoice finance lenders and can line up spot, selective and whole-ledger options side by side against your own numbers. If you would like to talk it through, speak to our invoice finance team and we will help you find the shape that fits how your business actually trades.