Invoice finance: get paid now for work you have already invoiced

If you sell to other businesses, you already know the feeling. The work is done, the invoice is out, the customer is reliable, and the money will arrive in forty-five days. Meanwhile, wages, suppliers and rent arrive on time every time. Invoice finance closes that gap by advancing cash against invoices you have already issued, so the money you have earned starts working for you now instead of sitting in someone else’s accounts payable.

How invoice finance works

1. You deliver goods or services to a business customer and issue an invoice.
2. You submit the invoice to the funder, often by connecting your accounting software.
3. The funder advances an agreed share of the invoice value, typically quickly.
4. Your customer pays on their usual terms.
5. The funder releases the remaining balance to you, minus its fees.

Because the facility is linked to your invoices, it grows as your sales grow. Win a big new client and the funding available rises with their invoices, which is something a fixed loan cannot do. No property is needed, because the invoices themselves are the security.

Want to see the numbers for your own debtor book? The invoice finance calculator estimates the upfront advance, the balance to follow and the cost in dollars.

Factoring and discounting

You will hear two terms:

• Factoring. The funder buys or takes over the collection of your invoices. Customers usually pay the funder directly. It suits businesses that would welcome help with collections.
• Discounting. You keep control of collections and customer relationships, and the arrangement is often confidential. It suits businesses with established credit control.

There are also selective facilities, where you choose individual invoices to finance, and whole-of-ledger facilities that cover your entire debtor book. Selective options suit occasional use; whole-of-ledger options usually suit businesses that will use the facility continuously.

Who invoice finance suits

Strong fit	Weak fit
Wholesalers and distributors	Cafes, retailers and other cash businesses
Manufacturers selling to trade	Businesses selling mostly to consumers
Labour hire and recruitment	Very small or one-off invoices
Transport and logistics contractors	Disputed or conditional claims
Professional and IT services to business	Invoices to related companies

If your income arrives daily through a card terminal, invoice finance is not the right tool. A line of credit or merchant cash advance is likely to fit better.

Got a debtor book that is holding back your cash? Tell us about it and we will check whether invoice finance is the right fit.

What it costs

Invoice finance fees are usually a combination of a service or administration fee and a charge for the money advanced, which grows the longer an invoice is outstanding. Some funders also charge setup, minimum monthly or audit fees. Ask for a worked example in dollars for a typical month of invoices. The invoice finance calculator lets you plug in that total and see the cost per day of waiting saved.

Questions to ask before you sign

• Is the facility confidential, or will customers be told to pay you differently?
• Can I choose which invoices to finance, or is it the whole ledger?
• What happens if a customer pays late, partly or not at all?
• Are there minimum usage commitments or exit fees?
• How are disputes and credit notes handled?

Invoice finance and your customers

Many owners worry that invoice finance signals trouble. In practice, it is a mainstream working capital tool used by healthy, growing businesses. Confidential products avoid the question entirely. If a facility does involve your customers, a short, confident message that you have a new payment arrangement is usually all that is needed.

Making invoices finance-ready

Funders prefer clean, clear invoices: correct ABNs, purchase order numbers where your customer uses them, accurate descriptions and payment terms that match your agreement. Tidy credit control on your side, such as reminder emails and prompt follow-up, also makes a facility cheaper and smoother because invoices are paid on time. Our guide on getting customers to pay faster is worth a read alongside this page, and slow-paying customers covers the wider problem.

How invoice finance fits with your other funding

Invoice finance rarely works alone. Many businesses pair it with a modest line of credit for costs that are not tied to invoices, such as rent, software or a one-off repair. Others use it to bridge a period of rapid growth and later move to a cheaper term facility once cash reserves have built up. If you already have a loan with another lender, check whether it includes a charge over your debtors, because a funder will need to know who has first claim on the invoices. Raising this early prevents delays during setup and makes sure the facility does not clash with what you already have in place.

Seasonality matters too. A business whose invoicing spikes before the end of the financial year, or around harvest or the Christmas trading period, can lean on the facility while the debtor book is large and let it shrink naturally when invoicing slows. That flexibility is one of its strongest features.

An illustrative example

An illustrative labour hire business invoices construction companies weekly on 45-day terms and pays its workers weekly. Every new site it supplies widens the gap between wages paid and invoices collected. With invoice finance, the business receives most of each week’s invoice value shortly after billing, pays its team on time and takes on new sites without worrying that growth will empty the account.

Unlock the cash in your invoices

If good customers on long terms are squeezing your cash flow, a 60-second enquiry is the place to start. There is no credit check to enquire, we never broadcast your details to a crowd of funders, and a real person reads every enquiry. Tell us your typical invoice size, your customers’ industries and how long they take to pay, and we will match you to the right structure. Apply now.