# Supply Chain Finance vs Invoice Finance Source: https://www.cashbookfinance.co.uk/blog/supply-chain-finance-vs-invoice-finance Last updated: 2026-10-03 > Supply chain (reverse) finance and invoice finance compared - who arranges it, whose credit it relies on, what it costs and which suppliers can use it. Compare ## Supply chain finance vs invoice finance Supply chain finance (also called reverse factoring) is set up by a large **buyer** so its suppliers can be paid early, based on the buyer's credit strength. Invoice finance is arranged by the **supplier** itself, against its own invoices to many customers. If your customer offers a supply chain finance programme it can be cheap money; if not, invoice finance is the route you control. Written by [Bjorn Laku](https://www.cashbookfinance.co.uk/bjorn-laku), Director & CMO. Reviewed by the Cashbook Finance lending team. **In this guide** - How each works - Side by side - Which to use ### How each works **Supply chain finance** - A large buyer approves your invoice for payment. - A bank or platform offers to pay you early, less a discount. - The buyer pays the funder on the original due date. **Invoice finance** - You raise invoices to your customers. - A funder advances a percentage of eligible invoices - up to 90% at Cashbook Finance, after approval and setup. - The balance, less fees, follows when your customers pay. ### Side by side | | Supply chain finance | Invoice finance | | --- | --- | --- | | Who arranges it | The buyer | Your business | | Whose credit it relies on | The buyer's | Your customers' and your business's | | Which invoices | Only that buyer's approved invoices | Eligible invoices across your ledger (or selected ones) | | Cost | Often low, reflecting the buyer's credit | Reflects your ledger, customers and service level | | Control | Set by the buyer's programme | Set by your facility | ### Which to use - If a major customer offers a programme, it can be worth joining for that customer's invoices. - For the rest of your ledger, or if no programme exists, invoice finance gives you funding you control. - If you need to pay suppliers before you can invoice, look at [trade finance](https://www.cashbookfinance.co.uk/trade-finance) - compared in [trade finance vs invoice finance](https://www.cashbookfinance.co.uk/blog/trade-finance-vs-invoice-finance). ### A practical decision test The question is not which product is better but which invoices each can fund. A buyer's programme covers that buyer only; invoice finance covers the ledger you choose. #### Commercial fit Join a buyer's programme where it is offered and good value; use invoice finance for every other customer. #### Evidence and eligibility Supply chain finance relies on the buyer approving each invoice; invoice finance looks at your customers, ledger quality and controls. #### Operational fit Check whether a programme restricts assigning that buyer's invoices elsewhere, so the two arrangements do not conflict. #### Alternatives Trade finance for paying suppliers before you can invoice; selective invoice finance for occasional large invoices. ### Model the downside, not just the headline Model your cash flow if the buyer changes or withdraws its programme; funding that depends on one customer's choice can disappear at short notice. #### Where this can go wrong Joining a programme can tie a large customer's invoices to one funder. Make sure an existing or planned invoice finance facility can exclude them cleanly. ### Questions to ask before signing - Which customers' invoices would each arrangement cover? - Does the buyer's programme restrict assigning its invoices elsewhere? - What does early payment cost compared with an invoice finance advance? - What happens if the programme ends? ### Documents and controls to prepare Every invoice finance discussion goes better with the same core pack: a current [aged-debt report](https://www.cashbookfinance.co.uk/blog/invoice-finance-glossary#term-aged-debt-report), representative contracts and invoices with delivery or acceptance evidence, recent management accounts with a short cash forecast, and an honest schedule of credit notes, bad debts and customer concentration. We keep one maintained resource covering the full pack, the questions that surface the all-in cost, and what to monitor once a facility is live - [read the invoice finance preparation checklist](https://www.cashbookfinance.co.uk/blog/invoice-finance-preparation-checklist). This guide is general information, not a recommendation or an offer of finance. #### See what your invoices could release Tell us how your business invoices and a director will give you a straight, no-obligation view on fit - usually within a day or two. Funding #### Funding facilities that can complement invoice finance Bjorn LakuRead Guide #### Export invoice finance: funding invoices to overseas customers Bjorn LakuRead Factoring #### Single invoice factoring: fund one invoice without a full-ledger facility Bjorn LakuRead ### Decide who should arrange the funding Use the guide to organise the evidence and operating decision, not simply to compare product labels. #### Customer programmes Ask large customers whether they run a supply chain finance programme, and on what terms. #### Ledger spread If revenue comes from many customers, invoice finance covers more of it than one programme. #### Using both Check whether invoices paid early under a programme must be excluded from your facility. ### More guides on invoice finance - [Asset-based lending vs invoice finance](https://www.cashbookfinance.co.uk/blog/asset-based-lending-vs-invoice-finance) - [CHOCs: client handles own collections](https://www.cashbookfinance.co.uk/blog/chocs-client-handles-own-collections) - [Construction invoice finance: CIS and retentions](https://www.cashbookfinance.co.uk/blog/construction-invoice-finance-cis-retentions) - [Invoice discounting guide](https://www.cashbookfinance.co.uk/blog/invoice-discounting-guide) - [Invoice factoring guide](https://www.cashbookfinance.co.uk/blog/invoice-factoring-guide) - [Invoice factoring vs business loan](https://www.cashbookfinance.co.uk/blog/invoice-factoring-vs-business-loan) --- Cashbook Finance. Cashbook Finance Limited is registered with the Financial Conduct Authority under Firm Reference Number 782472. Company number 10723098. Registered office: Cumberland House, 24–28 Baxter Avenue, Southend-on-Sea, Essex SS2 6HZ. Registered with the Information Commissioner’s Office under reference ZB545200. All finance is subject to eligibility, satisfactory due diligence, credit approval and agreed terms. Invoice finance, trade finance and bridging finance may not be suitable for every business. The availability, structure, amount, pricing, fees, security requirements and completion timescales of any facility will depend on the applicant’s circumstances, the quality of the supporting evidence provided and our assessment of the proposed transaction. Any figures, examples, rates or timescales shown on this website are for illustrative purposes only and do not constitute an offer, commitment or guarantee of finance. Terms and conditions apply. Bridging finance is secured against property. 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