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Invoice finance has become one of the fastest-growing funding solutions for Australian businesses that need to unlock cash tied up in unpaid invoices. To help you understand how it works and whether it’s right for your business, we’ve answered the most common questions people ask Google about invoice finance.

1. What is invoice finance?

Invoice finance is a form of short-term funding that allows a business to access money owed to them before their customers have paid. Instead of waiting 30, 60, or even 90 days for invoices to be settled, you can sell or borrow against your receivables and receive up to 95% of the invoice value within 24–48 hours.

This type of funding is particularly useful for businesses that face cash flow gaps between completing work and being paid. It effectively turns your outstanding invoices into an immediate source of working capital, without needing to take on traditional bank debt.

2. How does invoice finance work?

The process begins once you’ve issued an invoice to a customer. You provide the details of that invoice to an invoice finance company. They will then advance you most of the value up front, usually between 80% and 95%. When your customer pays, the lender releases the remaining balance, minus their fees.

It’s a straightforward way to speed up cash inflows. Businesses can use the funds to cover wages, pay suppliers, or invest in growth—without having to wait for slow-paying clients to catch up.

3. What are the different types of invoice finance?

There are three main types of invoice finance: factoring, discounting, and selective (or spot) factoring. Invoice factoring involves the lender managing your sales ledger and chasing payments directly from customers. Invoice discounting, on the other hand, leaves you in control of collections and is often confidential.

Selective invoice finance allows you to choose which invoices to fund, giving flexibility if you don’t want to commit your entire ledger. The right option depends on whether you prefer confidentiality, flexibility, or the support of a third party handling customer collections.

4. Can I transfer my invoice finance facility to another provider?

Yes, transferring invoice finance from one provider to another is possible, though it does require planning. Most agreements are set up as ongoing contracts, so you’ll need to check exit clauses, notice periods, and settlement terms with your current lender.

Many businesses switch providers to get lower fees, better advance rates, or more flexible terms. The process is similar to refinancing any other type of loan—you’ll need to settle your current facility, often with help from your new provider.

5. How does invoice finance compare with loans or overdrafts?

Unlike a loan or overdraft, invoice finance is directly tied to your sales. The more invoices you issue, the more funding becomes available. Traditional loans, in contrast, give you a fixed sum regardless of sales performance, and overdrafts are capped by your bank’s assessment of risk.

Invoice finance can also be quicker to arrange than bank loans, with approval often based on the quality of your debtors rather than your own credit history. This makes it attractive to growing SMEs that might struggle to access large overdrafts or long-term loans.

6. Is invoice finance right for my business?

Invoice finance is best suited to businesses that sell to other businesses (B2B) on credit terms. Industries such as transport, construction, recruitment, and wholesale are common users because invoices often take weeks or months to be paid.

If you regularly face cash flow gaps despite strong sales, invoice finance can be a powerful tool. However, if your customers typically pay upfront or within a few days, the benefits may not outweigh the fees involved.

7. What is the difference between invoice financing and invoice factoring?

The terms are sometimes used interchangeably, but they aren’t identical. Invoice financing is the umbrella term for borrowing against unpaid invoices. Factoring is a specific type where the finance company buys your invoices outright and takes over credit control.

This means your customers pay the factoring company directly. While it can save you the effort of chasing debts, some businesses prefer invoice discounting, which is more discreet and keeps collections in-house.

8. What is the typical process from enquiry to funds?

The setup process usually starts with an application to an invoice finance provider. They’ll ask for recent financials, a debtor ledger, and details of your invoicing practices. Once approved, facilities can often be set up within one to two weeks.

After setup, accessing funds is fast. You raise an invoice, upload it to the provider’s portal, and usually receive your cash advance within 24–48 hours.

9. How long does the invoice finance process take?

Initial setup may take a bit longer than a bank overdraft because the lender must verify your invoices and customers. Expect one to two weeks for due diligence and legal documentation.

Once the facility is live, funding is near-instant. Many fintech-based providers offer same-day transfers once an invoice is approved, giving you predictable and rapid access to working capital.

10. Can new-start businesses or phoenix companies use invoice finance?

Yes, invoice finance can be an option even for new or restructured businesses. Because the funding is secured against your invoices rather than your trading history, providers are often willing to support companies without long track records.

That said, the quality of your debtors is key. If your customers are established, creditworthy businesses, lenders will be more comfortable offering high advance rates—even if your business itself is new.

11. How much money can be borrowed through invoice finance?

The amount you can access depends on your sales volume. Typically, providers advance between 80% and 95% of the invoice value. For example, if you raise $100,000 in invoices, you could receive $80,000 to $95,000 upfront.

Because the facility grows with your invoicing, it naturally scales with your business. The more you sell, the more working capital becomes available.

12. Does it have to be disclosed to customers?

With invoice factoring, customers usually know you’re using the facility, since they pay the finance company directly. Invoice discounting, however, is normally confidential—your customers continue paying you as normal.

If discretion is important to you, invoice discounting may be the preferred choice. Many SMEs choose it to avoid giving the impression that they are under financial pressure.

13. Does invoice finance lock me into a long contract?

Most providers offer 12-month rolling contracts, but shorter terms are available from some fintech lenders. Traditional banks often prefer longer agreements to cover setup costs.

Before signing, check for exit fees or notice periods. If flexibility matters, ask about selective invoice finance, which allows you to fund invoices on a case-by-case basis with no long-term tie-ins.

14. Can I access account details in real time?

Yes, most modern invoice finance companies offer online portals where you can track funded invoices, available balances, and fees in real time.

This visibility makes it easier to manage your cash flow. Some providers even integrate with accounting software like Xero, MYOB, or QuickBooks to give a seamless view of your finances.

15. Can I use more than one provider at once?

Typically, no—you usually work with one provider at a time because they need control over the debtor book that secures their funding.

However, selective invoice finance allows more flexibility. With spot factoring, you can fund specific invoices as needed, sometimes even alongside other credit facilities.

16. What are the fees and charges involved?

Invoice finance fees usually come in two parts: a service fee (a percentage of turnover) and a discount fee (similar to interest on the advance). Rates vary based on your industry, invoice volume, and debtor quality.

Expect costs to be higher than a bank loan but offset by the speed and flexibility. Always request a clear breakdown before signing so you know exactly what you’ll pay.

17. Will using invoice finance signal business distress to customers?

Not necessarily. Many healthy, growing companies use invoice finance simply to smooth cash flow. In fact, in industries like construction or recruitment, it’s a very common practice.

If you’re concerned about perception, invoice discounting keeps the arrangement confidential, so customers won’t know you’re using it.

18. Is it expensive compared to other finance options?

Invoice finance is usually more costly than secured loans but more affordable than payday-style working capital loans. The trade-off is speed and flexibility.

For businesses with predictable invoice volumes, the benefits—immediate cash, scalable funding, and less reliance on personal guarantees—often outweigh the higher costs.

19. How much paperwork is involved?

Initial setup requires financial statements, a debtor ledger, and identification documents. Once established, ongoing admin is minimal.

Fintech-based lenders are reducing paperwork even further, using automated invoice verification through integrations with accounting software.

20. What portion of the invoice is released upfront?

Most providers advance 80% to 95% of the invoice value. The remaining balance—minus fees—is paid once the customer settles the invoice.

The exact percentage depends on your customers’ creditworthiness and your industry. Businesses with large, reliable debtors can expect higher advance rates.

21. Do I effectively lose part of each invoice?

You don’t lose invoice value—you pay a fee for the service. Think of it as the cost of early access to your own money.

For many businesses, giving up a small percentage of the invoice is worth it to keep operations running smoothly and avoid taking on traditional debt.

22. How quickly can I access cash after invoicing?

Once your facility is live, funds are usually available within 24–48 hours of submitting an invoice. Some providers even offer same-day advances.

This makes invoice finance one of the fastest funding options available to SMEs.

23. What happens if the invoice isn’t paid within 90 days?

If a customer fails to pay, the outcome depends on whether you have a recourse or non-recourse agreement. With recourse, you’re responsible for repaying the advance. With non-recourse, the finance company absorbs the risk, though fees are higher.

It’s essential to understand which type you’re signing up for, especially if you have customers with unpredictable payment histories.

24. How long does it take to set up a facility?

For most providers, expect 1–2 weeks for application, credit checks, and legal documentation. Some fintech lenders advertise setup in as little as 48 hours for smaller facilities.

Preparation is key—having your financial statements and debtor ledger ready can speed things up considerably.

25. What contract durations are typical?

Traditional providers often require 12-month contracts, though shorter rolling agreements are becoming more common. Selective invoice finance avoids long contracts altogether.

If flexibility is important, shop around and ask about termination clauses before signing.

26. Do I need to give a personal guarantee?

Many providers require a director’s guarantee, especially for small businesses. This means you could be personally liable if your customers don’t pay.

However, some fintech lenders are beginning to waive guarantees for facilities backed by highly creditworthy debtors. Always check the fine print before committing.

27. How much can I borrow (advance rate)?

Advance rates typically fall between 80% and 95% of invoice value. The exact figure depends on your industry, debtor quality, and facility structure.

Lenders may offer higher rates if you deal with blue-chip companies or government agencies with low credit risk.

28. What criteria determine eligibility?

Eligibility is usually based on whether you issue invoices to other businesses on credit terms. Lenders also assess your debtor ledger, invoice practices, and customer creditworthiness.

Even if your business is young or has limited trading history, strong debtors can make you a good candidate for invoice finance.

29. What’s the difference between factoring and discounting?

Factoring involves selling invoices and handing collections over to the provider, while discounting lets you retain control and keep the arrangement confidential.

The choice depends on whether you prefer discretion or the convenience of outsourced credit control.

30. Who benefits most from invoice finance?

SMEs in industries with long payment terms—such as construction, logistics, wholesale, and recruitment—are the biggest beneficiaries. These businesses often have large outgoings (like wages and supplier bills) before clients settle invoices.

By smoothing cash flow, invoice finance allows them to keep operating without disruption and even invest in growth opportunities without waiting months to be paid.