# Trade Finance vs Invoice Finance Source: https://www.cashbookfinance.co.uk/insights/trade-finance-vs-invoice-finance Last updated: 2026-10-26 Author: Bjorn Laku, Director & Chief Marketing Officer (https://www.bjornlaku.com/) Publisher: Cashbook Finance Limited > Compare trade finance and invoice finance for supplier payments, stock purchases and customer invoices, including timing, security, costs and suitable uses. FCA-registered UK lender FRN 782472 ## Trade finance vs invoice finance. Trade finance and invoice finance sit at different points in the transaction. One helps fund the purchase or supply of goods before sale; the other releases cash after invoices have been raised. 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** Option 1 **Trade finance** Supports supplier, stock or import/export timing before the final customer has paid. Supplier payments · Stock cycle · Pre-invoice stage Option 2 **Invoice finance** Releases cash from completed sales once an eligible invoice has been raised. Completed sale · Debtor ledger · Post-invoice stage Decision shortcut **Use this rule** If the pressure is before sale, assess trade finance. If the pressure is after sale, assess invoice finance. Before sale · After invoice · Transaction timing - [Invoice Finance vs Overdraft](https://www.cashbookfinance.co.uk/insights/invoice-finance-vs-overdraft) - [Invoice Finance vs Business Loan](https://www.cashbookfinance.co.uk/insights/invoice-finance-vs-business-loan) - [Invoice Factoring vs Invoice Discounting](https://www.cashbookfinance.co.uk/insights/factoring-vs-invoice-discounting) - [Selective vs Full-Ledger Finance](https://www.cashbookfinance.co.uk/insights/selective-invoice-finance-vs-full-ledger) - [Bridging Finance vs Development Finance](https://www.cashbookfinance.co.uk/insights/bridging-finance-vs-development-finance) - [Bridging Finance vs Commercial Mortgage](https://www.cashbookfinance.co.uk/insights/bridging-finance-vs-commercial-mortgage) - [Invoice Finance Costs Explained](https://www.cashbookfinance.co.uk/insights/invoice-finance-costs-explained) - [Bridging Finance Costs Explained](https://www.cashbookfinance.co.uk/insights/bridging-finance-costs-explained) Check eligibility · About 2–3 minutes, no credit search. ### Trade finance or invoice finance: the practical difference. The right comparison is not simply the lowest headline rate. Match the facility to the asset being funded, the evidence available, the expected duration, the operational work required and the event that repays it. A cheaper product used for the wrong job can create more delay, covenant pressure or refinancing risk than a correctly structured specialist facility. Funding logic **Timing** Trade finance sits before or during the buying cycle. Repayment logic **Evidence** Supplier invoices, customer orders and margin evidence matter. Main watch-out **Watch-out** Invoices without delivery evidence or debtor strength are weak. Check eligibility · About 2–3 minutes, no credit search. Trade finance vs invoice finance: comparison table | Question | Usually stronger when | Watch-out | | --- | --- | --- | | Timing | Trade finance sits before or during the buying cycle. | Invoice finance sits after delivery and invoicing. | | Evidence | Supplier invoices, customer orders and margin evidence matter. | Debtor quality, invoice validity and delivery evidence matter. | | Repayment | Often repaid when goods are sold and customer invoices settle. | Repaid from customer collections on funded invoices. | | Watch-out | Speculative stock without demand is weak. | Invoices without delivery evidence or debtor strength are weak. | Worked example ### One order, both stages. An importer buys £40,000 of goods, sells them 45 days later for £52,000 and gives its customer 30 days to pay. Trade finance covers the gap before the sale; invoice finance takes over once the invoice is raised. Check eligibility · Talk it through with a director | Supplier paid up front by trade finance | £40,000 | | --- | --- | | Trade finance fee, about 2% (example) | £800 | | Customer invoice once goods are delivered | £52,000 | | Advanced against that invoice (90%), repaying the trade finance | £46,800 | | Discount charge on the invoice, 30 days | £1,040 | | Your margin after both charges | £10,160 | Illustrative: a trade finance fee of about 2% for the 45 days before sale (as the trade finance page assumes), then a 90% invoice advance and a discount charge of about 2% per 30 days. ### Trade finance or invoice finance: use the comparison to make a funding decision. The facilities start at different points in the commercial cycle. #### Before delivery Trade finance can pay an approved supplier against a verified order or transaction. #### After delivery Invoice finance can release cash after eligible goods or services are delivered and invoiced. #### Repayment Trade finance is repaid from the transaction proceeds; invoice finance reduces when the debtor pays. Examples are educational only. Eligibility, pricing, security and final terms always depend on a formal assessment of your business, your documents and the facility proposed. **Related guidance:** [Trade finance](https://www.cashbookfinance.co.uk/trade-finance) · [Pricing & decisions](https://www.cashbookfinance.co.uk/pricing-decisions) · [Eligibility](https://www.cashbookfinance.co.uk/eligibility) · [Case studies](https://www.cashbookfinance.co.uk/case-studies) Quick answers ### Common questions. Check eligibility · All questions **Can I use both on the same order?** Yes. Trade finance pays the supplier; once you invoice your customer, invoice finance can repay it. **Does trade finance fund speculative stock?** Generally not. It is strongest against a confirmed customer order with a clear margin. **Which documents are needed?** Supplier invoices, the customer order, shipping and delivery evidence and the margin. **Is trade finance only for importers?** No. It supports any business that must pay suppliers before it is paid. Can’t see your question? Talk it through with a director #### Official sources - Import goods into the UK · GOV.UK - UK Export Finance · GOV.UK Official guidance and legislation on the rules this page refers to. They explain the rules in general; take advice on your own position. Check eligibility · About 2–3 minutes, no credit search. ### More guides on invoice finance - [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) - [Facilities that pair with invoice finance](https://www.cashbookfinance.co.uk/insights/funding-options-with-invoice-finance) - [Invoice discounting guide](https://www.cashbookfinance.co.uk/insights/invoice-discounting-guide) - [How invoice finance fixes cash flow](https://www.cashbookfinance.co.uk/insights/invoice-finance-cash-flow) - [Invoice finance for digital media agencies](https://www.cashbookfinance.co.uk/insights/invoice-finance-digital-media-agencies) #### Sector guidance - [Import & export finance](https://www.cashbookfinance.co.uk/sector-import-export) - [Wholesale finance](https://www.cashbookfinance.co.uk/sector-wholesale) - [Manufacturing finance](https://www.cashbookfinance.co.uk/sector-manufacturing) - [Food & beverage finance](https://www.cashbookfinance.co.uk/sector-food-beverage) - [Agriculture finance](https://www.cashbookfinance.co.uk/sector-agriculture) --- 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.