Selective Invoice Finance vs Full Facility - Business Expert
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Selective Invoice Finance vs Full Facility

Independent guides and comparisons across business loans, invoice finance, asset finance, commercial mortgages, and more.

Mike Smith
Author
Mike Smith
Updated on 30 April 2026
Independently assessed Rates verified 30 April 2026
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The Decision in One Paragraph

A full facility assigns your entire debtor book to the lender — you finance all your invoices and pay an ongoing service charge whether you’re drawing heavily or not. Selective finance lets you pick specific invoices when you need to, with no minimum commitment. The choice comes down to volume and consistency: if invoice finance is a permanent fixture of how you manage cash flow, a full facility is almost always cheaper per pound advanced. If you need it occasionally — for a large one-off invoice or a specific client — selective is more practical.

What Both Products Do

Both selective invoice finance and whole-ledger facilities:

  • Advance a percentage of unpaid invoice value before the customer pays
  • Are repaid when the customer settles the invoice
  • Charge a fee based on the invoice value and the period of the advance

The structural difference is commitment and scope.

Full Facility (Whole-Ledger)

A whole-ledger facility requires the business to assign all (or substantially all) eligible invoices to the lender. Every invoice raised goes into the facility, and the lender has first claim on the debtors.

Cost structure:
– Discount rate on the outstanding advance balance
– Service charge — typically 0.5–2% of annual turnover — regardless of how much is drawn

Implications:
– Lower per-pound cost than selective for high-volume users
– Minimum commitments usually apply — a minimum monthly or annual service charge
– Lender manages a relationship with the full debtor book — concentration limits may apply
– Disclosure or confidentiality is determined at the facility level

Selective Invoice Finance

Selective finance allows the business to choose which invoices to finance. No obligation to assign all invoices. No minimum volume.

Cost structure:
– Per-invoice fee — typically 2–6% of the invoice value, charged when the invoice is financed [VERIFY — HUMAN CONFIRMATION NEEDED]
– No ongoing service charge on unfinanced invoices

Implications:
– Higher per-invoice cost than a full facility at equivalent volumes
– No lock-in — the business can use it when needed and stop when it doesn’t
– Better suited to sporadic or occasional use cases
– Customer awareness varies by provider — some selective facilities are disclosed, some are not

Side-by-Side

Feature Selective Invoice Finance Full Facility (Whole-Ledger)
Commitment None — use as needed Ongoing — all or most invoices assigned
Cost per invoice Higher Lower at volume
Minimum fees None (or minimal) Usually applies
Flexibility High Low
Suitability Irregular or large one-off invoices Consistent invoice pipeline
Eligibility More accessible Usually requires established turnover threshold
Credit control Varies Determined at facility level

The Volume Crossover

The economics favour a full facility once the business is regularly financing enough invoices to cover the minimum service charge. For a business that finances £1 million of invoices per year at 0.5% service charge, the full facility costs £5,000 in service charges plus the discount rate. The equivalent 12 invoices at 3% selective fee costs £30,000 in fees alone.

The crossover point depends on volume, average invoice size, and the specific pricing offered. For any business financing more than around 30–40% of its annual turnover through invoice finance regularly, the maths of a full facility typically win. [EDITORIAL JUDGEMENT]

When Selective Makes Sense Despite the Cost

  • Testing the product: a business unsure whether invoice finance is right for it can use selective finance to trial the product without commitment
  • Seasonal peaks: businesses with short-term, predictable cash flow pressures (e.g. pre-season stock purchase) can use selective finance for a specific period
  • Concentration problems: a business whose debtor book is too concentrated for a full facility may find selective finance for specific customers an alternative
  • One key client: a business that has one large client with 90-day terms can finance those invoices selectively without committing its entire ledger
  • Selective Invoice Finance
  • Invoice Factoring
  • Invoice Discounting
  • Spot Factoring
  • Invoice Finance Fees Comparison
  • Working Capital Finance