# Asset-Based Lending vs Invoice Finance Source: https://www.cashbookfinance.co.uk/insights/asset-based-lending-vs-invoice-finance Last updated: 2026-10-26 Author: Bjorn Laku, Director & Chief Marketing Officer (https://www.bjornlaku.com/) Publisher: Cashbook Finance Limited > Asset-based lending explained - how it combines receivables, stock, plant and property in one facility, and when invoice finance alone is enough. Compare FCA-registered UK lender FRN 782472 ## Asset-based lending vs invoice finance Asset-based lending (ABL) is a single facility secured on several types of business asset - usually receivables, plus stock, plant and machinery, and sometimes property. Invoice finance is the receivables part on its own. ABL suits larger businesses with significant assets beyond their invoices; for many SMEs, invoice finance is the simpler and more focused tool. Written and reviewed by [Bjorn Laku](https://www.cashbookfinance.co.uk/bjorn-laku), Director & CMO. INV-2048 · Arden Health Group Illustration Cash received · this invoice A £50,000 invoice on 30-day terms - **Invoice value** £50,000 - **Paid to you, day 1–2** £45,000 - **When your customer pays** £4,000 Invoice value · £50,000 Illustrative: a 90% advance and a discount charge of about 2% of the invoice. Rates and advances vary by business, sector and customers. Check eligibility **£30m+** funded · **100+** UK businesses since 2019 · London SE1 - FCA **782472** - ICO **ZB545200** - Companies House **10723098** Worked example ### One month of invoices, funded. A manufacturer raises £50,000 of invoices on 60-day terms. Its machinery and stock could support asset-based lending later, but the immediate gap is the 60 days between delivery and payment. Invoice finance answers the timing gap on its own; asset-based lending adds stock and machinery when the need is larger. Check eligibility · Talk it through with a director | Invoice value, on 60-day terms | £50,000 | | --- | --- | | Advanced within 24–48 hours (90%) | £45,000 | | Discount charge, about 2% per 30 days, for 60 days | £2,000 | | Paid to you when your customer pays | £3,000 | | Total cost of funding this invoice | £2,000 (4% of the invoice) | | If your customer pays 30 days late | +£1,000 in charges | Illustrative: up to 90% advanced and a [discount charge](https://www.cashbookfinance.co.uk/insights/invoice-finance-glossary#term-discount-charge) of about 2% of the invoice per 30 days. Rates, advances and any [service fee](https://www.cashbookfinance.co.uk/insights/invoice-finance-glossary#term-service-fee) vary by business, sector and customers, and are confirmed in writing before you commit. **In this guide** - What an ABL facility can include - When invoice finance alone is enough - When ABL may be worth exploring Check eligibility · About 2–3 minutes, no credit search. ### What an ABL facility can include What an ABL facility can include | Asset | Typical role in ABL | | --- | --- | | Receivables (invoices) | The core: funded like invoice finance | | Stock / inventory | Funded at a lower percentage, based on what it would realise | | Plant and machinery | Term loan against valued equipment | | Property | Term loan against commercial property | | Cash flow | Sometimes a cash-flow loan on top | ### When invoice finance alone is enough - Most of your working capital is tied up in unpaid invoices; - You have little stock, or it moves quickly; - You want a facility that grows with sales without complex asset valuations. ### When ABL may be worth exploring - Large amounts of stock or equipment that could support more borrowing; - A refinancing, acquisition or turnaround where you need to borrow against everything the business owns; - Turnover and asset values large enough to justify the monitoring and valuation costs. Check eligibility · About 2–3 minutes, no credit search. ### Building the equivalent from separate facilities Some businesses combine invoice finance with other specialist facilities rather than one ABL: for example invoice finance for receivables, [trade finance](https://www.cashbookfinance.co.uk/trade-finance) for stock purchases, and asset finance for equipment. See [funding options that pair with invoice finance](https://www.cashbookfinance.co.uk/insights/funding-options-with-invoice-finance). ### Asset-based lending: a practical decision test Asset-based lending is worth the complexity when stock, equipment or property could support meaningful extra borrowing. If your working capital is mostly unpaid invoices, invoice finance is simpler. #### Commercial fit Suits larger businesses with significant assets, often for refinancing, acquisitions or growth that needs more than receivables can support. #### Evidence and eligibility Expect valuations of stock and equipment, regular stock reports and field audits, as well as ledger reporting. #### Operational fit Monitoring is heavier than invoice finance alone; finance teams report on several asset classes. #### Alternatives Combine invoice finance with trade finance for stock and asset finance for equipment as separate, simpler facilities. Check eligibility · About 2–3 minutes, no credit search. ### Asset-based lending: model the downside, not just the headline Model availability if stock values are marked down or equipment is revalued, since those advance rates move more than receivables. #### Where this can go wrong More security does not always mean more usable funding. Low advance rates on stock and the cost of valuations and monitoring can make the extra headroom smaller than expected. ### Asset-based lending: questions to ask before signing - What [advance rate](https://www.cashbookfinance.co.uk/insights/invoice-finance-glossary#term-advance-rate) would apply to each asset class? - How often are stock and equipment revalued? - What reporting and audits are required? - How does the cost compare with separate facilities? ### Asset-based lending: 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/insights/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](https://www.cashbookfinance.co.uk/insights/invoice-finance-glossary#term-credit-note), 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/insights/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 Laku Costs explained #### Invoice finance costs explained Bjorn Laku Myths #### Invoice factoring vs a business loan Bjorn Laku ### Weigh each asset before choosing the structure Use the guide to organise the evidence and operating decision, not simply to compare product labels. #### Receivables Start with the sales ledger: it usually supports the highest advance. #### Other assets Stock, plant and property need valuations and add monitoring and reporting. #### Fit If receivables alone cover the need, invoice finance is the simpler structure. ### More guides on invoice finance - [Recourse vs non-recourse invoice finance](https://www.cashbookfinance.co.uk/insights/recourse-vs-non-recourse-invoice-finance) - [Supply chain finance vs invoice finance](https://www.cashbookfinance.co.uk/insights/supply-chain-finance-vs-invoice-finance) - [CHOCs: client handles own collections](https://www.cashbookfinance.co.uk/insights/chocs-client-handles-own-collections) - [Construction invoice finance: CIS and retentions](https://www.cashbookfinance.co.uk/insights/construction-invoice-finance-cis-retentions) - [Export invoice finance](https://www.cashbookfinance.co.uk/insights/export-invoice-finance) - [Invoice discounting guide](https://www.cashbookfinance.co.uk/insights/invoice-discounting-guide) --- 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. Your property may be repossessed if you do not maintain repayments on a loan secured against it. Applicants should obtain independent legal, financial and tax advice where appropriate.