Guides · UK limited companies
Debtor Concentration and Invoice Finance
Debtor concentration means a large share of the ledger is owed by one customer or a connected group. Providers may cap availability because one payment failure would have a larger effect.
NBS Finance is a broker and introducer, not a lender. An enquiry does not guarantee an offer.
How concentration can restrict available funding
A provider may approve an invoice but still limit how much it will fund against one customer or connected group. This is different from the overall facility limit. Restrictions can matter even when the customer pays on time.
For illustration only: if a customer owes £300,000 but a provider recognises only £200,000 for funding, an 85% advance would support £170,000 against that customer before other reserves and existing drawings. The unfunded balance is not automatically released by raising the overall facility limit.
What to prepare
Start with the aged debtor report and identify the largest customers, connected groups, their share of the ledger, current credit or concentration limits and the amount of invoices not being funded. Explain invoice age, payment history, disputes, credit notes, contract terms and evidence of delivery or accepted work.
If you already use invoice finance, include the current provider, the restriction you want reviewed and the agreement details available. Not every concentrated ledger can be funded, and changing providers does not guarantee the restriction will disappear.
NBS Finance is a broker and introducer, not a lender. NBS does not charge the client a separate broker fee. Providers set costs and terms and may carry out business or director credit checks; ask which searches will be made before a full application. An enquiry does not guarantee an offer.
Questions worth resolving
- Is the issue a customer credit limit, a concentration limit, overdue debt or an invoice eligibility problem?
- Would the business still have sufficient headroom if the largest customer paid late?
- Is the requested funding supported by the remaining eligible ledger, rather than expected future sales?
Review our switching-provider guide and large invoice-finance facilities for the next relevant step.
Questions about customer limits
Are credit and concentration limits the same?
No. A credit limit concerns the provider’s exposure to a customer; a concentration rule limits dependence on one customer or group. Either can restrict funding despite a larger overall ceiling.
Can connected customers count together?
Providers may aggregate connected entities. Identify the legal invoice debtor and group links rather than treating each trading name as independent.
Can a single debtor be considered?
Some structures allow specialist assessment, but suitability and caps depend on the debtor, contract, verification and business. There is no automatic single-debtor approval.
Will switching remove the restriction?
Not necessarily. Ask for a written comparison of eligible debt, customer limits, additional reserves and actual headroom. A facility review can frame staying, renegotiating or switching.
What evidence helps a review?
Provide dated ledgers, connected-customer exposure, payment history, accepted work, disputes and the current availability reconciliation. Explain the cash effect of a late payment.
Further reading and scope
This page is general commercial-finance information, not legal, tax or accounting advice. Read the relevant official guidance at www.british-business-bank.co.uk.
NBS Finance primarily supports UK limited companies. NBS Finance is not incorporated as a limited company and is not authorised or regulated by the Financial Conduct Authority. Where applicable, NBS works with lenders and intermediaries that are FCA-authorised for their own regulated activities; their status does not make NBS Finance FCA-authorised.
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