A confirmed future booking is money you are owed, and money you are owed can be financed. Lenders advance a portion of the value now and recover it when the booking pays out, which lets an accommodation host, a service business or a supplier convert contracted revenue into cash today. It is a legitimate and useful instrument, and it is expensive if used for the wrong thing.
The same mechanism sits behind invoice discounting, purchase order funding and bridging finance.
How it works
You present a confirmed booking, invoice or purchase order. The lender advances a percentage of its value immediately, holds back the rest, and settles when payment arrives, deducting fees and interest.
The lender is assessing the party who owes the money as much as they are assessing you, which is why a booking confirmed through a well-known platform or an invoice to a large company supports a better advance than one from an unknown payer.
What it is genuinely good for
Bridging a known gap: buying stock to fulfil an order you already hold, covering wages before a large invoice settles, or preparing a property for a booked season.
The test is whether the cash converts into the delivery of the very revenue being financed. If it does, the cost is a business expense rather than a loss.
When it is the wrong tool
Funding ongoing losses, covering a shortfall with no defined end, or repaying other debt. Short-term finance carries a high effective rate because the period is short, and rolling it repeatedly is how businesses end up worse off than before.
It is also wrong where the underlying booking can be cancelled without penalty, because you keep the repayment obligation and lose the income.
Work out the real cost
Convert every charge into what it costs over the actual period: initiation fees, service charges, interest and any early or late settlement penalties. Compare that against the margin on the work being financed.
If the finance cost exceeds the margin, the order is not worth taking on those terms. That calculation is the whole decision.
Check the lender is authorised
Credit providers must be registered with the National Credit Regulator, and providers of financial services must be authorised. You can verify a provider with the Financial Sector Conduct Authority before signing anything.
Read what happens if the payer defaults. In many arrangements the risk returns to you, which means you repay regardless of whether the booking or invoice was ever settled.
Frequently asked questions
What can be used as collateral?
Confirmed bookings, invoices and purchase orders. The lender assesses the party who owes the money as well as your business.
When does this kind of finance make sense?
When the cash directly enables delivery of the revenue being financed, such as buying stock for an order you already hold.
When is it the wrong choice?
Funding ongoing losses, covering an open-ended shortfall, or repaying other debt. Rolling short-term finance repeatedly compounds the problem.
How do I judge the cost?
Convert all fees and interest into the cost over the actual period and compare it with the margin on the work. If it exceeds the margin, decline.
Who carries the risk if the payer defaults?
Often you do. Check whether the arrangement is recourse or non-recourse before signing.
Further reading
Originally published in November 2018. Updated September 2026 to explain how booking and invoice-backed finance works rather than reporting one product launch.
