Invoice purchasing is the plain description of what a factor does: it buys the receivable rather than lending against it. That structure matters more than the marketing name, because a purchase and a loan behave differently on your balance sheet, in an insolvency, and in what the funder can do when a customer does not pay. A broker sits between you and the funders and is paid for the introduction.
Purchase, not loan, and why it matters
When a funder purchases the invoice, the debt becomes theirs and the cash you receive is the price of a sale rather than borrowed money. In a recourse facility they can require you to buy it back if the customer does not pay, which puts the risk back where it started; in a non-recourse facility they cannot, for the failures the agreement names. That single clause is the largest price difference in this market and the one most often skimmed. Read which failures are covered: customer insolvency is usually included, a customer simply refusing to pay over a dispute usually is not.
What a broker actually does
A good invoice finance broker knows which funders take your sector, which decline it, which are comfortable with concentrated ledgers and which will fund a construction application. That knowledge is worth real money to a business approaching this market for the first time, because the alternative is finding out one application at a time. A broker is paid by the funder, usually as a share of the fees, which is not a problem in itself and is a reason to ask two specific questions.
The two questions to ask a broker
How many funders are on the panel, and are you paid the same by all of them. A panel of three is a shortlist, not a market. A commission that varies by funder is not disqualifying and it is something you are entitled to know, because it tells you why a particular recommendation arrived. A broker who answers both plainly is worth working with. This site is an introducer rather than a broker: it does not act for you, does not advise, and publishes what each lender says about itself so the shortlist is yours to make.
Questions people ask about invoice purchasing
Is invoice purchasing the same as factoring?
Effectively yes: factoring is the purchase of a receivable at a discount. The term invoice purchasing is used to make the legal structure explicit, which matters most in an insolvency and in whether the arrangement appears as debt.
Do invoice finance brokers charge the business?
Usually not directly; they are paid by the funder, commonly as a share of the fees. Ask whether the commission is the same across the panel, because that is what tells you how a recommendation was reached.
Can I approach funders directly instead?
Yes, and for a straightforward ledger it is often quicker. A broker earns their place where the ledger is unusual: a concentrated customer base, a construction contract, an export element, or a sector most funders decline.