Lendus.

Invoice Finance for Engineering Companies

Project-based work shouldn't mean project-based cash flow — release milestone invoices within 24 hours and keep your engineers deployed.

200+ UK lenders
2-minute application
No credit check to apply
FCA-regulated brokers

Rates

0.75% – 3.0%

of invoice value

Advance

Up to 85%

of invoice value

Facility Size

£50k – £10m

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Why engineering businesses use invoice finance

Engineering businesses — from mechanical and electrical contractors to civil and structural consultancies — often work on long-duration projects where invoicing is tied to milestone completion or stage certification rather than regular monthly billing. This creates extended gaps between significant costs — staff time, specialist equipment, subcontractor fees — and actual payment. Public sector and Tier 1 contractor clients may take 60–90 days from invoice approval to settlement, and disputes over technical sign-off can extend this further. Invoice finance provides engineering businesses with immediate liquidity against approved milestone invoices, enabling them to fund ongoing project costs, meet payroll, and commit to new work without waiting months for payment on completed stages.

Finance types available

Invoice Factoring

Rate
0.75% - 2.5%
Advance
Up to 80%
Control
Factor collects from your clients

Best for: Specialist engineering firms and consultancies without dedicated credit control who work with a range of industrial or public sector clients

Invoice Discounting

Rate
1.0% - 3.0%
Advance
Up to 85%
Control
You maintain client relationships

Best for: Larger engineering businesses with established accounts teams who want confidential funding against high-value project invoices

Selective Invoice Finance

Rate
1.25% - 3.5%
Advance
Up to 80%
Control
Choose which invoices to finance

Best for: Engineering contractors with a small number of long-term project clients who want to fund specific milestone invoices as they fall due

Common challenges

Eligibility

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Market context

Engineering and technical services contribute approximately £1.5 trillion to the UK economy across all sub-sectors. The Engineering Employers' Federation (Make UK) reports that late payment adds an average of 28 days beyond agreed terms for engineering supply chain businesses, with SME contractors disproportionately affected. Project-based work with milestone billing means engineering businesses often have both the highest invoice values and the longest effective debtor days in the professional services space.

Frequently asked questions

Can invoice finance fund milestone invoices on long-term contracts?
Yes — provided the milestone has been formally completed and accepted by the client, the resulting invoice is eligible for funding. Engineering-specialist finance providers understand milestone billing structures and will assess your contracts to understand when invoices will be raised and whether they are subject to client sign-off or certification processes.
What if a project overruns or a milestone is disputed by the client?
Under a recourse invoice finance facility, if a client disputes an invoice and does not pay, you are required to repay the advance. It is therefore important to have robust contractual documentation around milestone acceptance. Some providers offer bad debt protection for approved debtors who become insolvent, but contractual disputes are typically outside the scope of protection.
We work on a mix of fixed-price and time-and-materials contracts — can invoice finance handle both?
Yes — invoice finance is based on the invoices you raise rather than the underlying contract structure. Whether you invoice a fixed lump sum at milestone completion or a monthly time-and-materials statement, the resulting invoice can be funded provided it relates to completed work that the client is obligated to pay.
Can engineering businesses use invoice finance for public sector contracts?
Yes — public sector clients such as local authorities, NHS trusts, and government departments are considered good-quality debtors by most providers, as the risk of non-payment is low. However, the slow payment processes common in the public sector are precisely why invoice finance is valuable — you don't have to wait for the public sector's payment cycle to have cash available.
How is the advance rate determined for engineering invoices?
The advance rate — typically 80–85% for engineering — reflects the nature of the debtor book. Factors influencing this include the creditworthiness of your clients, typical invoice values, whether invoices are subject to client certification, and whether there is concentration risk with a small number of large accounts. Providers will review a sample of your invoices and client list during the application process.

Related industries

Construction Manufacturing

Guides and resources

What Is Invoice Discounting? Factoring vs Discounting Invoice Finance vs Business Loan Best Factoring Companies

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