Selective Invoice Finance vs Full Facility: Which Fits?

Selective vs Full Facility at a Glance

What Is the Difference Between Selective and Whole-Ledger Invoice Finance?

The difference is scope: how much of your sales ledger the funder has a claim on. Everything else that gets bundled into this comparison, and a great deal does, belongs to a different decision. The mechanics of the advance are close to identical on both sides. You raise an invoice, the funder releases most of its value, and the balance less charges follows when your customer pays.

That narrowness is worth holding on to, because the market talks about these two structures as though scope came bundled with a cost, a contract, a collections arrangement and a level of confidentiality. It doesn’t. Scope is one setting on the facility. The others are set separately, sometimes by the same provider offering four different combinations, and you can end up with a selective product that ties you in for a year or a whole-ledger product your customers never hear about.

What Selective Invoice Finance Means

Selective invoice finance funds receivables you nominate, and leaves the rest of the ledger alone. You decide, invoice by invoice or customer by customer, what goes into the facility. If you raise forty invoices in a month and only one of them is going to sit unpaid for ninety days, that is the one you fund.

What the word doesn’t tell you is anything about the terms. Kriya’s selective invoice discounting, priced on its broker page in August 2026, runs on a minimum 12-month contract, takes an all-asset debenture and may ask for personal guarantees. That is a selective product by scope and a committed one by every other measure. If you have been told selective means commitment-free, that page is the answer to it.

What a Full or Whole-Ledger Facility Means

A full or whole-ledger facility funds most or all of your eligible receivables on a continuing basis. You assign the ledger, the funder takes first claim on your debtors, and the facility grows as your sales do. New invoices join it automatically rather than one at a time, which is the practical appeal: nobody has to decide anything each month.

Read “eligible” carefully, because it is doing a lot of work in that sentence. A whole-ledger facility doesn’t fund every invoice you raise. Debts to consumers, invoices beyond the funder’s payment-term cap, work that is disputed or only part-delivered, customers who fail the credit check, and anything above a debtor concentration limit all sit outside it. The wording that survives scrutiny is most or all eligible receivables, and we use it deliberately: the gap between your ledger and your funded ledger is the gap between what you expected to draw and what actually arrives.

Selective, Single-Invoice, Spot and Whole-Turnover Explained

These terms overlap, and they aren’t interchangeable product definitions. We take the British Business Bank as the neutral baseline. Its guidance applies “selective” to financing selected customer accounts, and keeps “spot factoring” for financing distinct invoices. A good part of the UK market uses the two the other way round, and several providers use “selective” for a single-invoice product.

Both usages are in live commercial circulation, so the label on a provider’s page tells you very little about what you would actually be buying. Ask the question the label is meant to answer instead: what am I nominating, one invoice or one customer? The difference matters, because nominating a customer account puts every invoice to that customer through the facility, and removes the month-by-month choice that made selective attractive in the first place.

Selective vs Full Facility Costs

Both structures charge you in the same two ways, and we separate them before comparing anything, because that is the point at which two quotes start to mean the same thing. There is a charge for the service, expressed as a percentage of invoice or turnover value, and there is a charge for the money, expressed as a rate over Bank Rate and running for the days you are actually out of pocket. Aldermore names exactly this pair on its own page: a service fee, which is a percentage of the invoice value, and a discount fee, calculated on the balance advanced.

Add the minimum monthly fee, any arrangement fee, and the VAT that lands on one of those charges but not the other, and you have the whole bill. A single headline percentage tells you none of it, which is why two facilities quoted at the same rate can cost several thousand pounds apart over a year.

How Selective Invoice Finance Is Charged

Selective pricing is normally built around the invoices you fund, so a month in which you fund nothing should, in principle, cost you nothing. Kriya publishes a service fee starting from 0.25% of funded invoices and a discount charge starting from 2.50% above Bank of England Base Rate, which was 3.75% and unchanged since 18 December 2025 when we checked on 25 August 2026. On those bases, funding a £20,000 invoice for 45 days costs £50 in service fee and about £139 in discount charge.

In principle. The same page carries a minimum monthly fee of £950, and that is where the pay-as-you-go story stops. At a 0.25% service fee you would need to fund £380,000 of invoices in a month before the fee you have earned exceeds the minimum you owe.

Kriya asks for consistent monthly invoicing of £100,000 or more to qualify at all, so a business that meets its entry criteria and no more pays that minimum in every month of the year, including the ones where you invoice as normal and draw nothing. If the quoted service fee comes in at 1% rather than the 0.25% Kriya publishes as a starting point, the threshold drops to £95,000 a month, which is a useful reminder that the higher rate isn’t automatically the worse deal.

How Full-Facility Pricing Works

A whole-ledger facility charges its service fee against assigned turnover rather than against the invoices you happened to draw on, which is the structural reason it gets cheaper per pound as you use it more. The discount charge works the same way it does on the selective side: a rate over Bank Rate, applied to the balance drawn, for the days it is drawn.

The problem is that you can’t look any of it up. Aldermore states that the cost will be dependent on your requirements from the facility and the size of your business, and that it will put a proposal together once it understands the business. It publishes an advance of up to 90% and a minimum turnover of £750,000, and no percentage for either charge. We checked the other established whole-ledger providers on the same day and found the same silence.

That isn’t a criticism of any one firm. It does mean you are comparing a published price against a quotation you have to ask for, and the only honest thing we can do here is say so rather than fill the gap with a market average nobody is bound by.

Minimum Fees and Contract Costs

The minimum monthly fee is the charge that decides this comparison, and it is almost never in the headline. It is the amount the facility bills you in a month when your usage doesn’t get you there on its own, and it converts a usage-based product into a subscription. On the worked figures below it accounts for £9,600 of an £18,673 annual bill, which is to say most of what the business pays isn’t for funding at all. A product sold on the promise that you pay only for what you use, billing you in the months you used nothing, is a subscription with a flexible name.

Contract length compounds it. A 12-month minimum term sitting on top of a monthly minimum fee is a committed annual cost, and pricing it as one is the only way to see what the facility really is. We put three questions to any quote, selective or whole-ledger: what is the minimum monthly fee, how long is the minimum term, and what does it cost to leave early. Providers answer all three readily once asked, and rarely before.

VAT on Invoice Finance Charges

The two charges have opposite VAT treatments, which is a trap for anyone comparing quotes side by side. HMRC’s VAT Notice 701/49 sets out the liability at section 5.5: the administration or service charge is standard rated, and the discount or interest charge is an exempt supply by the factor. Section 5.10 confirms that debt collection services are taxable, which is why a factoring facility carries more VAT than a discounting one at the same headline rate.

For most VAT-registered businesses this is a timing question rather than a cost: you pay the VAT, then recover it on the next return. It becomes a real cost if your business is partly exempt, and it becomes a comparison error for everyone the moment one provider quotes inclusive of VAT and the other quotes exclusive. Strip VAT out of both quotes, compare the net figures, and put the VAT back afterwards as a cash-flow line. On the worked example below, VAT adds £2,280 to the annual bill and lands entirely on the service element.

Worked Cost Comparison

We priced the same year both ways. The business turns over £1.2 million, invoices average £20,000 on 45-day terms, and it funds three invoices a month: £720,000 of invoices funded, £648,000 advanced at a 90% advance rate. The selective column uses Kriya’s published bases. The whole-ledger column can’t use published bases, because there are none, so it shows the formula instead and the point at which the two meet.

Treat the inputs as illustrative rather than as quotes. They are our arithmetic applied to one scenario, and a real proposal will differ on every line. What the scenario is really showing you is the £9,600 that leaves your cash flow for months in which you invoice as usual and draw nothing.

The two structures meet at a whole-ledger service charge of 0.95% of assigned turnover, and that is the number to carry into a conversation with a broker. Below it, a whole-ledger facility is cheaper for this business even though it funds only a quarter of its turnover. Above it, the selective arrangement wins. And it has a short derivation you can redo on your own figures: while the minimum monthly fee is binding, the break-even service charge is simply the annual minimum divided by the turnover you would assign. Here that is £11,400 over £1.2 million.

We hold the drawn balance constant on both sides of that comparison, and in practice a whole-ledger facility tends to increase it, because funding stops being a decision and becomes the default. That extra discount charge buys you extra cash, so it isn’t a hidden cost so much as a different position, but it does mean the whole-ledger bill in a real year is usually larger than the model above and the balance sheet behind it looks different too.

When Does a Full Facility Become Cheaper Than Repeated Selective Funding?

Earlier than the per-invoice rate suggests, and for a reason that has nothing to do with it. We ran the same selective facility at six usage levels and the unit cost falls twelvefold, from £134 per £1,000 advanced to £11, without a single term changing. What moves is how far the minimum monthly fee gets spread.

Occasional Funding

Take a business that funds six invoices a year, one every couple of months, because a single large customer settles on ninety-day terms while everyone else pays on time. That is the textbook case for selective finance, and on the published terms above it costs £14,512 for the year, of which £11,100 is the shortfall against a minimum fee it never came close to earning off. Per £1,000 advanced, £134, and that is our arithmetic on the provider’s own published bases rather than a market average.

Which isn’t an argument against selective finance so much as an argument against that particular facility for that particular business. A genuinely occasional need is better served by a spot arrangement with no standing facility behind it, and the British Business Bank makes the same point for businesses under £300,000 of turnover, where it says a traditional facility is generally unsuitable and selective or spot finance may fit better. If you are funding six invoices a year, the question to ask is not selective or whole-ledger. It is whether you should be paying a monthly minimum at all.

Regular Monthly Funding

Three invoices a month changes the arithmetic without changing anything about the product. The same facility now costs £18,673 a year and £29 per £1,000 advanced, roughly a fifth of the unit cost at six invoices a year, because the fixed element is carried by four and a half times the volume. This is the level at which the two structures genuinely compete, and where a whole-ledger quotation is worth getting.

It is also the level at which the flexibility argument quietly stops applying. If you draw in eleven months out of twelve, the option not to draw in the twelfth is worth very little, and you are paying an annual premium to keep it. We rate this as the most common expensive mistake in invoice finance: a business chooses selective because the commitment frightened it, then uses the facility exactly as though it had committed.

High-Volume Funding

Past £380,000 of invoices funded in a month, on a 0.25% service fee, the minimum stops binding and the selective facility starts behaving like a whole-ledger one on price. The unit cost bottoms out around £11 per £1,000, and from there the discount charge is doing nearly all of the work.

At that point cost is no longer the interesting difference between the two structures, and the decision moves on to scope, concentration limits and how much administration you want to run. A business funding that much every month has usually stopped choosing invoices in any meaningful sense anyway. The threshold falls as the quoted service fee rises: at 1%, it arrives at £95,000 of funded invoices a month, which is well within reach for a business Kriya would accept.

Which Option Gives You More Control?

We treat control as four separate settings, because treating them as one is how a business ends up surprised by its own facility. Which invoices are funded, who runs credit control, who collects the money, and whether the customer is told: each is decided by the product you buy rather than by whether that product is selective or whole-ledger.

Choosing Which Invoices Are Funded

This is the one setting that genuinely does follow from facility scope. Selective gives you the decision each time; a whole-ledger facility takes it away, in exchange for not having to make it. Whether that is control or admin depends entirely on how often the answer changes.

There is a second-order effect worth knowing about. Choosing which invoices to fund means choosing which customers a funder credit-checks, and a selective facility lets you keep a weak debtor out of the process altogether. A whole-ledger facility assesses the book, and a customer who fails that assessment is excluded from funding whether you wanted them in or not.

Credit Control and Collections

Who chases payment is set by whether you buy factoring or discounting, not by how much of the ledger is funded. The British Business Bank describes factoring as the funder managing your sales ledger and being involved in collecting payment directly from your customers, and discounting as a finance-only product without that day-to-day ledger management. Both come in selective and whole-ledger versions.

The practical consequence lands on your own team. Under discounting you keep the reconciliation, the statements and the awkward phone call in week ten; under factoring you hand those over and accept that someone else is now speaking to your customer about money. That is a real trade, and it is worth pricing: the service charge on a factoring facility is normally higher precisely because it buys labour you would otherwise supply.

Disclosure and Whether Customers Know

Confidentiality can’t be read off facility scope, and any page telling you selective finance is confidential is guessing. Disclosure is a product feature. The British Business Bank notes that many invoice discounting facilities are undisclosed, so customers are unaware a provider is involved, while customers of a factoring arrangement are likely to know. Both statements are about collections structure, not about how much of your ledger is funded.

The wrinkle that catches people is invoice verification. A funder that never handles your collections may still telephone your customer to confirm the invoice is genuine and the work is done, particularly on a first drawdown, and how that call is made varies by provider. Our selective invoice finance guide sets out four distinct disclosure models across five providers, which is more than most comparisons acknowledge.

So ask the question in the form that gets a usable answer. Not “is it confidential?”, which invites a yes, but: who telephones my customer, what do they say they are calling about, and does it happen on every invoice or only the first? The reply decides whether your largest account finds out how you fund your cash flow, and that isn’t a conversation you want to have by accident on a Monday morning.

Factoring vs Discounting Is a Separate Decision

Scope and collections are two axes, and every combination of them exists. Selective doesn’t mean discounting; whole-ledger doesn’t mean factoring. Once you can see them as a grid rather than a spectrum, most of the confusion in this category disappears, and so do a fair number of the claims made about it.

Work out which column you want before you shortlist anything, because it changes the cost, the VAT and who your customer speaks to. Our guide to invoice factoring versus invoice discounting takes that decision on its own terms.

Which Should Your Business Choose?

Three things about your own business settle this, and you already know all three: how often the gap appears, how many customers cause it, and whether you can justify a standing monthly charge against it. Take them in that order.

Choose Selective Invoice Finance If

The gap is genuinely occasional. A handful of drawdowns a year, driven by particular invoices rather than by the general shape of your cash flow.

One or two customers cause it. A dominant client sitting on ninety-day terms is a selective problem, not a ledger-wide one.

Your billing arrives in lumps. Project and contract work, or a seasonal peak with a defined window, where funding for two months out of twelve is the whole requirement.

Concentration would block a full facility. If one customer is most of your book, a whole-ledger funder may cap what it will advance against them, and funding that customer selectively can be the way through.

You want to test the product. Trialling invoice finance before you assign the ledger is a fair reason to pay more per invoice, provided the trial isn’t sitting on a 12-month contract.

Choose a Full Facility If

You draw every month. Not most months. Every month, across several customers, as part of how the business is funded.

A meaningful share of the ledger is involved. Once you are financing a substantial proportion of receivables repeatedly, spreading a service charge across assigned turnover is the cheaper mechanism.

You need the funding to grow with sales. A facility that scales on its own removes a monthly negotiation you would otherwise repeat forever.

Predictable availability matters more than optionality. Knowing roughly what you can draw next month is worth more to some businesses than the right to draw nothing.

The ongoing cost is justified by use. Price it properly first: service charge on assigned turnover, discount charge on the drawn balance, minimum monthly fee, arrangement fee, and VAT on the service element.

Can You Switch Between Selective and Full Invoice Finance?

Often, but not on demand, and the cost of moving is where the small print of the contract you signed finally becomes visible. Some providers offer both structures and will move you between them as requirements change; others won’t, and moving means moving funder. Terms vary enough that the only reliable answer is the one written into your own agreement.

What a move costs you comes down to the contract, the calendar and the security somebody has registered against your business.

Contract expiry. Minimum terms are real, and at least one selective product publishes its own: Kriya’s selective invoice discounting starts at 12 months. Check the anniversary date before you start any conversation, because the answer changes either side of it.

Notice period. Separate from the minimum term, and frequently longer than people assume. Notice usually has to be served in writing, and often only at certain points in the cycle.

Termination charges. Leaving early can carry a fee, and where a minimum monthly fee applies, it can mean paying the remaining minimums anyway.

Release of security. Kriya’s broker terms specify an all-asset debenture with personal guarantees possible, and where a facility took one the outgoing funder has to release it before the incoming one can register. That handover is what sets the timetable.

Ledger migration. Outstanding funded invoices have to be settled or transferred, customers paying into a trust account need redirecting, and there is normally a spell when both funders have an interest in the same ledger.

Give yourself three months. That isn’t a rule out of anybody’s handbook, it is what the notice period and the security release add up to once you have both dates in front of you, and running out of road here puts a hole in your cash flow at the exact moment you were trying to fix one.

Compare Invoice Finance Providers

Availability is the first filter, and it is narrower than the market makes it sound. Some established providers run whole-ledger facilities only, some offer both structures under one brand, and a handful of newer funders do selective and nothing else. Turnover thresholds then cut across that: Aldermore asks for £750,000, Kriya asks for consistent monthly invoicing of £100,000 or more, and the British Business Bank says a traditional facility is generally unsuitable below £300,000 of annual turnover.

Providers also differ on debtor criteria, advance rates, minimum commitments and how much they will tell you before you apply. Treat that last one as a fair proxy for the rest: a funder that publishes its minimum monthly fee is a funder that expects you to work out what the facility does to your cash flow before you sign, rather than after. Our best invoice finance companies comparison ranks them; this page deliberately doesn’t, because choosing a structure and choosing a firm are different jobs and doing both at once is how people end up with the wrong one of each.

A panel application is the quickest route to the whole-ledger number this page keeps telling you to ask for. Tide Funding Options puts one application in front of a panel of invoice finance lenders without touching your credit score, which is enough to put a real quotation next to the published selective pricing. You will still have to ask each lender the three questions above, because a panel quote arrives as a headline rate like any other.

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Related guides

Invoice Finance Explained→ Selective Invoice Finance→ Invoice Factoring vs Invoice Discounting→ Invoice Discounting→ Spot Factoring→ Best Invoice Finance Companies→