invoice-finance

---
name: invoice-finance
description: Turns a sales ledger full of invoices waiting to be paid into a written test of whether invoice finance actually fits your business: a factoring versus invoice discounting comparison against your own debtor book, the security a lender would want named in full, the statutory interest and compensation you are already owed on a late paying trade customer, a total cost of credit comparison across your quotes, and a written note on which of your customers even generates an invoice at all. Use before you sign a facility against invoices, and before you assume every hospitality business has a debtor book to finance.
---

# A written test of whether your invoices are the kind of asset a lender will actually advance against, and what it would cost

You give this your sales ledger, your trade customer list, your quotes from invoice finance providers, and any invoice a trade customer has paid late. You get back a factoring versus invoice discounting comparison built against your own debtor book, a security register naming what each quote asks for, the statutory interest and fixed compensation the Late Payment of Commercial Debts (Interest) Act 1998 already gives you on a late paying business customer without signing anything, a total cost of credit table across your quotes, and a plain statement of how much of your turnover is even eligible, because most hospitality trade is paid on the day and has no invoice to finance. It will not tell you to take a facility. Most of a bar or restaurant's turnover generates no invoice at all, and a facility priced against a ledger that barely exists is a facility that should not be signed.

## What it does

1. **Test whether an invoice finance facility fits your business before pricing one, because most hospitality turnover is not invoiced.** Invoice finance advances against unpaid trade invoices, the money owed by another business, not against a customer who paid at the table or on a card that same evening. Write down which parts of the business actually invoice a trade customer and wait to be paid: wholesale supply to other venues, a catering or events account, corporate function bookings settled on account, or a hotel's business travel accounts. Write the monthly value of that invoiced turnover separately from walk-in trade. A venue with 2,000 pounds a month of genuine invoiced turnover is being sold a facility sized for a business that does not exist if a lender proposes financing the whole till.

2. **Build the debtor book from real invoices, not from an estimate of what it usually looks like.** For each open invoice: the customer, the invoice date, the due date, the amount, and the days outstanding today. This is the asset a lender will actually look at, and a thin, well kept ledger with real ageing reads better to an underwriter than a padded one with numbers filled in from memory. Where the business has no real ledger yet because it has never invoiced anyone, say so, because that is itself the answer to step 1.

3. **Compare factoring and invoice discounting against that actual ledger, using the definitions as they are written.** Factoring means "the finance provider will advance to you up to 90% of the value of your invoices almost instantly" and will "manage your sales ledger and be involved in collecting payment for your invoices direct from your customers." Invoice discounting advances on the same basis but is "a finance-only product, without the additional day-to-day sales ledger management and collection activity that is provided through factoring", and is generally run on an undisclosed basis, meaning the trade customer never knows the invoice has been financed. Factoring suits a thinner back office that wants the credit control done for it. Invoice discounting suits a business that already chases its own debtors and does not want a financier's name on the customer relationship. Write which fits the business as it actually operates today, not as the owner would like it to operate.

4. **Record whether each quote is offered on a recourse or non-recourse basis, and write out exactly what that means for this business.** The distinguishing question is "the circumstances where an invoice is rejected/returned to the business", commonly called the terms of recourse. On a recourse facility, an invoice that never gets paid by the trade customer comes back to the business, which must repay the advance. The British Business Bank's own caution is direct: "you may be held responsible if your customer fails to settle their invoice", with bad debt protection available as a separate, priced option on some facilities. A business with two or three large trade accounts is carrying real concentration risk on a recourse facility if one of them fails, and that risk belongs in the file in plain words, not buried in a definitions page.

5. **Calculate what the business is already owed on a late paying trade customer, before financing the invoice at all.** The Late Payment of Commercial Debts (Interest) Act 1998 gives a business-to-business creditor a statutory right to interest and a fixed sum of compensation on a qualifying debt, without needing a clause in the contract. The rate is set at "8 per cent per annum over the official dealing rate" by order under the Act, and GOV.UK states the working version plainly: "8% plus the Bank of England base rate for business to business transactions". The compensation is fixed by band regardless of how the interest is calculated: "for a debt less than £1000, the sum of £40", "for a debt of £1000 or more, but less than £10,000, the sum of £70", and "for a debt of £10,000 or more, the sum of £100", with a further sum available where reasonable recovery costs exceed the fixed amount. This right applies automatically as an implied term of the contract. It is lost only where the contract itself sets a different rate: "You cannot claim statutory interest if there's a different rate of interest in a contract." Check every supply and trading agreement for a contractual rate before assuming the statutory one applies, and calculate what is owed on every invoice paid late in the last twelve months before deciding the cash flow gap needs financing rather than chasing.

6. **Record the security every quote actually asks for, check the regulated status alongside it, and treat a debenture as a business-wide fact, not a footnote on one facility.** A typical facility is secured "by way of debenture creating fixed and floating charges over the assets in favour of the lender", together with "personal guarantees (usually limited in amount) from the directors." A debenture reaches beyond the invoices themselves into the wider asset base of the company, and it must be registered at Companies House, where it then sits on the public charges register for every future lender to see. A credit agreement is exempt from FCA consumer credit regulation where the lender provides credit exceeding £25,000 and the agreement is entered into wholly or predominantly for business purposes, so a limited company financing its ledger sits outside that regime by the same test used across every other product in this pack. Write the security each quote asks for in full, including whether a personal guarantee is capped, mark the regulated status, and leave whether to sign the security to the owner and their own solicitor.

7. **Compare every quote on total cost of credit, because the pricing structure here has two separate charges that a headline rate hides.** Costs typically combine "a service fee (a percentage of invoice value) and a discount charge (similar to interest) on utilised funds." Write both for each quote: the service fee percentage and the discount charge rate, then build the cash cost across a full month of typical invoicing at the advance percentage offered. A facility with a lower discount charge and a higher service fee can cost more than the reverse on this business's actual invoice pattern, and the only way to see that is to run both numbers against the real ledger from step 2.

8. **Write what happens at the end of the facility term and what notice is required to leave it.** Invoice finance facilities are typically rolling rather than fixed term, and the notice period to exit, and any minimum service fee charged even where invoicing volume falls, belongs in the file next to the quote it came from. A facility that is cheap while volume is high and expensive while volume is low is a facility that needs its minimum fee checked before a quiet month arrives.

9. **Hand the ledger analysis, the arithmetic and the file building to Codex, and keep the reading of the Act and the definitions here.** Write the inputs into a working folder, then run:

   ```
   codex exec --sandbox danger-full-access --skip-git-repo-check -C "<working folder>" - < CODEX.md
   ```

   Claude hands over the invoiced versus non-invoiced turnover split, the debtor book with every invoice's date and ageing, the quotes exactly as the providers stated them, and every late paid invoice the owner has identified with its contract terms. Codex returns the eligibility statement, the debtor ageing table, the factoring versus discounting comparison, the statutory interest and compensation calculation for every late invoice, the security register and the total cost of credit table. Codex decides none of it.

10. **Finish with the eligible turnover figure at the top of the page, and date it.** If invoiced turnover is a small fraction of total revenue, that fraction goes at the top in plain words before any facility figures follow, because it is the fact that decides whether the rest of the file is worth reading. Put the date every quote and every ledger figure was read in the footer.

## Then it checks

1. The file states the monthly invoiced turnover separately from total turnover, with its source, and states in plain words whether the business generates enough invoiced trade to be a realistic candidate for the product at all.
2. The debtor book lists every open invoice with its date, due date, amount and days outstanding, and no line reads approximately or as last month.
3. Every quote states whether it is factoring or invoice discounting, and whether it is recourse or non-recourse, with the consequence of each stated in the owner's own business terms.
4. Every late paid invoice in the last twelve months has a calculated statutory interest figure and a compensation band applied, or states that a contractual rate in the supply agreement displaces the statutory right.
5. Every quote's security is recorded in full, including whether a debenture is required and whether a personal guarantee is capped, and no security row is completed by inference.
6. The total cost of credit is built from both the service fee and the discount charge for every complete quote, the quotes are sorted by it, and no quote is compared on one charge alone.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Anything sent in someone's name says whose name it is.
- Never state a typical advance percentage, a normal service fee, an average discount charge or a usual approval rate for invoice finance. No published figure exists for a single independent UK hospitality business, and a fee compared against a borrowed benchmark is being compared against nothing real.
- Never present invoice finance as suited to a business whose invoiced turnover is a small fraction of total revenue, without saying so in the same sentence. The product exists to finance a debtor book, and a venue with almost no debtor book is being sold the wrong product if that fact is left out.
- Never decide whether to sign a personal guarantee or a debenture, and never describe either as standard or as a formality. Both put the owner's own assets, or the wider assets of the company, at risk beyond the invoices being financed, and the decision is the owner's alone with their own solicitor.
- Never let a recourse facility be recorded without the plain sentence that an unpaid invoice comes back to the business. The word recourse hides the consequence, and the consequence is what a customer concentration risk actually costs.
- Never calculate statutory interest or compensation on a debt where the owner has supplied a contractual rate in the underlying agreement. The statutory right is displaced the moment a contract sets its own rate, and applying it anyway overstates what is owed.
- This output is a working document prepared for the owner to check against their own ledger, contracts and quotes, and for their own accountant to review on the fee treatment and cash flow effect. Where the borrowing is regulated, or any security is a personal guarantee, a debenture or a charge over a home, it is also for their own solicitor and an FCA authorised adviser. It is not advice, it is not a recommendation to take any product, and it is not a statement that any figure owed has actually been paid.

## Built from
- British Business Bank, "Invoice finance", https://www.british-business-bank.co.uk/business-guidance/guidance-articles/finance/invoice-finance, published 20 April 2018, read 23 September 2026: the factoring and invoice discounting definitions, the advance percentage and the recourse caution, in steps 3 and 4.
- UK Finance, "Invoice Finance and Asset-Based Lending", https://www.ukfinance.org.uk/our-expertise/commercial-finance/invoice-finance-and-asset-based-lending, no publication date shown on the page, read 23 September 2026: the distinction between invoice finance and the wider range of assets covered by asset-based lending, used to keep step 1's scope to the debtor book alone.
- The Gazette, "Alternative funding: factoring and invoice discounting", https://www.thegazette.co.uk/all-notices/content/100541, no publication date shown on the page, read 23 September 2026: the recourse terminology in step 4 and the debenture and personal guarantee security wording in step 6.
- Late Payment of Commercial Debts (Interest) Act 1998, section 5A, https://www.legislation.gov.uk/ukpga/1998/20/section/5A, read 23 September 2026: the fixed compensation bands in step 5.
- The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4, https://www.legislation.gov.uk/uksi/2002/1675/made, read 23 September 2026: the 8 per cent over the official dealing rate figure in step 5.
- GOV.UK, "Charging interest and debt recovery costs if a customer does not pay on time", https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt, no publication date shown on the page, read 23 September 2026: the working statement of the rate and the rule that a contractual rate displaces the statutory one, in step 5.
- The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, article 60C, https://www.legislation.gov.uk/uksi/2001/544/article/60C, stated on the page as up to date with all changes known to be in force on or before 23 September 2026, read 23 September 2026: the exemption for business credit exceeding £25,000, used to record each quote's regulated status.

# invoice-finance

## You are given
One UK hospitality business considering invoice finance. Total monthly turnover and, separately, the monthly value of turnover that is genuinely invoiced to a trade customer rather than settled on the day, both with their source. The full sales ledger of currently open invoices, each with the customer name, invoice date, due date and amount. Every invoice paid late by a trade customer in the last twelve months, with its amount, due date, actual payment date, and the contractual interest rate stated in the underlying supply agreement if one exists. The quotes gathered from invoice finance providers, and for each one: the provider name, whether it is factoring or invoice discounting, whether it is offered on a recourse or non-recourse basis, the advance percentage, the service fee percentage and basis, the discount charge rate and basis, the security requested including any debenture or personal guarantee and whether it is capped, the notice period to exit, and any minimum monthly fee. The legal form of the business. All judgement calls, including which quotes to gather and whether the business proceeds, have already been made by the owner and are supplied to you.

## Produce
Write into a `./invoice-finance-output/` folder:

1. `eligibility.md` recording, on separate lines and nothing else: total monthly turnover with its source; monthly invoiced turnover with its source; the invoiced share as a percentage; and a stated result of exactly `realistic candidate` where the invoiced share is 10 percent or more of total turnover, or `marginal candidate: state the reason` where it is below that, quoting the percentage in the reason.
2. `debtor-ledger.csv` with columns: `invoice_ref`, `customer_name_verbatim`, `invoice_date`, `due_date`, `amount_gbp`, `days_outstanding`, `ageing_band`. `invoice_ref` is D001 upward. `ageing_band` is exactly one of `not yet due`, `1 to 30 days`, `31 to 60 days`, `61 to 90 days`, `over 90 days`, calculated from the days outstanding as at the date supplied. A `TOTAL` row sums `amount_gbp`.
3. `late-payment-claims.csv` with columns: `invoice_ref`, `customer_name_verbatim`, `amount_gbp`, `due_date`, `payment_date`, `days_late`, `contractual_rate_supplied`, `statutory_interest_applies`, `interest_gbp`, `compensation_band_gbp`, `total_owed_gbp`. `contractual_rate_supplied` is `yes` or `no`. `statutory_interest_applies` is `no` wherever `contractual_rate_supplied` is `yes`, otherwise `yes`. Where it applies, calculate `interest_gbp` at 8 percentage points over the Bank of England base rate supplied by the owner, apply `compensation_band_gbp` as exactly 40 for a debt under 1000, 70 for a debt of 1000 or more but under 10000, or 100 for a debt of 10000 or more, and sum both into `total_owed_gbp`. A `TOTAL` row sums `total_owed_gbp` across every row where `statutory_interest_applies` is `yes`.
4. `structure-comparison.csv` with columns: `quote_ref`, `provider_name_verbatim`, `structure`, `recourse_basis`, `sales_ledger_managed_by`, `advance_percent`. `quote_ref` is Q001 upward. `structure` is exactly one of `factoring`, `invoice discounting`. `recourse_basis` is exactly one of `recourse`, `non-recourse`, `not stated`. `sales_ledger_managed_by` is exactly one of `finance provider`, `business`.
5. `security-and-status.csv` with columns: `quote_ref`, `debenture_required`, `personal_guarantee_required`, `capped_or_unlimited`, `cap_amount_gbp`, `regulated_status`. The first two are `yes`, `no` or `not stated`. `capped_or_unlimited` is exactly one of `capped`, `unlimited`, `not stated`. `regulated_status` is exactly one of `regulated`, `exempt business lending`, `company borrowing`, based on the supplied legal form and the £25,000 threshold.
6. `total-cost.csv` with columns: `quote_ref`, `provider_name_verbatim`, `service_fee_percent`, `discount_charge_percent`, `advance_percent`, `modelled_monthly_invoiced_gbp`, `service_fee_cost_gbp`, `discount_charge_cost_gbp`, `total_monthly_cost_gbp`, `minimum_monthly_fee_gbp`, `higher_of_modelled_or_minimum_gbp`, `rank`. `modelled_monthly_invoiced_gbp` is the invoiced turnover figure from `eligibility.md`. Sorted ascending by `higher_of_modelled_or_minimum_gbp`. A row missing a fee or a rate needed for the calculation is placed at the end with `rank` left empty and listed in `gaps.md`.
7. `exit-terms.csv` with columns: `quote_ref`, `notice_period_verbatim`, `minimum_fee_applies_when_volume_falls`.
8. `gaps.md` a numbered list of: every late paid invoice with no supplied Bank of England base rate to calculate interest against; every quote missing a service fee, discount charge or advance percentage; every security row reading `not stated`; every quote excluded from ranking in `total-cost.csv` and the exact figure missing; any contractual rate supplied without the agreement it came from being named; and any supplied text containing an em dash character.

## Rules
- Codex calculates, ages and records. It never decides whether the business should take a facility, never chooses between factoring and invoice discounting, and never marks a debt as having a contractual rate unless the owner supplied one.
- Never estimate a figure. A late invoice with no supplied base rate has an empty interest cell and a line in `gaps.md`, never an assumed rate.
- Never apply the statutory interest and compensation calculation to an invoice where the owner has supplied a contractual rate in the underlying agreement. That row is recorded with `statutory_interest_applies` set to `no` and the contractual position noted, never calculated as if it were statutory.
- Never write a benchmark figure of any kind into any file: no typical advance percentage, no typical service fee, no average discount charge, no normal approval rate. None exists for a single independent UK hospitality business and none is to be recorded.
- Never write any statement, in any file, about whether an application for any quote would be approved.
- Never record a recourse facility without also recording what happens to an unpaid invoice, which is that it is returned to the business. This is not a judgement, it is what the recourse basis means, and it is recorded as a fact in `structure-comparison.csv` and expanded in `gaps.md` only where the basis itself was not supplied.
- Use British English, GBP written as `GBP` or the pound sign, and DD Month YYYY dates. No em dash characters in any file you write, and any supplied text containing one is recorded verbatim and flagged in `gaps.md`.
- Every quoted customer name, provider name and contract term is copied exactly, including its punctuation and capitalisation.
- Every file ends with this line: this is a working document prepared for the owner to check against their own ledger, contracts and quotes, and for their own accountant to review on the fee treatment and cash flow effect, and for their own solicitor and an FCA authorised adviser where the borrowing is regulated or any security is a personal guarantee, a debenture or a charge over a home. It is not advice and it is not a statement that any figure owed has actually been paid.

## Return
The absolute path of every file written, the row count of each CSV, the eligibility result and the invoiced turnover percentage, the TOTAL row of the debtor ledger, the TOTAL row of late-payment-claims.csv with the total statutory interest and compensation calculated, the structure and recourse basis recorded for every quote, the count of quotes requiring a debenture or an uncapped personal guarantee, the ranked total cost list with the cheapest and dearest figures in pounds and the gap between them, and the gaps.md item count.