Invoice finance: getting paid now for work your customers will pay for later

Large businesses are supposed to pay small suppliers promptly, and the government now makes them report how they’re going. Their own reports aren’t encouraging. In its January 2026 update, the Payment Times Reporting Regulator said its 95th percentile measure, which captures how long the slow tail of small business invoices sits unpaid, rose from 58 to 64 days between reporting cycles. For a supplier with wages due every fortnight, two months is a long time to wait for money you’ve already earned.

Invoice finance is built for exactly that wait. Instead of borrowing against property or future profits, you borrow against invoices you’ve already issued.

The mechanics, from invoice to final payment

1. The job is finished and billed to a business customer on its usual terms, say 45 days.
2. The invoice goes to the financier, typically synced straight from Xero, MYOB or another accounting package.
3. The financier advances most of it, often within 24 hours, once it’s satisfied the work is done and the customer is creditworthy.
4. Your customer pays on the due date, into your own account or a financier-controlled one, depending on which product you chose.
5. The financier releases the balance after deducting its advance and fees.

A worked example: a labour hire business issues $160k of invoices this month to three construction companies. With an 85% advance it could draw about $136k within a day or two. When the customers pay over the following six weeks, the remaining $24k comes back less the financier’s fees. The facility grows automatically next month if invoicing grows.

Our invoice finance calculator works through this with your own figures.

Factoring, discounting or single-invoice funding?

Type	Who collects	Customers told?	Usually suits
Invoice factoring	The financier	Yes	Smaller or newer businesses without a credit team
Invoice discounting	Your own team	Generally no	Mature firms that already chase debts well
Selective or single-invoice	Varies	Often not	One-off gaps, big individual invoices, seasonal peaks

Whole-ledger facilities, sometimes called debtor finance, give you the highest limits and usually the lowest cost per dollar, but they cover your entire sales ledger and often carry a minimum term. Selective products let you pick and choose, which is flexible but typically dearer per invoice. For a deeper comparison see invoice factoring vs invoice discounting.

Published advance levels vary by provider and product. As at October 2026, according to their websites, ScotPac publishes an advance of up to 85%, Earlypay up to 80% with 85% possible in some cases, and single-invoice specialist FundTap up to 90%.

What do invoice financiers check?

Financier focus	How it plays out
Debtor strength	Who owes you, and how reliably they pay, outweighs your own credit score
Concentration	A single debtor dominating the book usually gets a funding cap of its own
Invoice quality	Work fully delivered, no disputes, no contra arrangements, clear payment terms
Ageing	Invoices beyond a set age, often around 90 days, usually drop out of the funded pool
Customer contracts	Terms that restrict assigning debts, allow set-offs or make payment conditional on milestones
Your business	Trading history, ATO position and existing lenders who may already hold security

The concentration limit is the one that surprises people. A business with one dominant customer may find its usable limit is smaller than its total ledger.

Want to know what your debtor ledger could unlock? Send us the outline; it takes around a minute.

Security and paperwork

Most facilities sit on your receivables rather than property. The financier will normally record its interest on the PPSR, frequently as a registration covering the whole business, and directors are usually asked to guarantee the facility. Where an existing lender already has a GSA over the company, expect the new financier to ask that lender to carve out the receivables or agree a priority deed. Sort that out early, because it’s a common source of delay.

What does invoice finance cost?

Pricing usually combines:

• a service fee, charged either as a slice of the invoices you fund or as a flat monthly sum;
• a discount charge on the cash you’ve drawn, accruing daily until the customer pays;
• sometimes set-up fees, minimum monthly fees and early exit fees on whole-ledger facilities.

Because charges run while invoices are unpaid, slow-paying customers make the facility dearer. Ask each provider for the total dollars it would have cost on last month’s actual invoicing, including any minimums, and compare that with the alternatives.

Pros and cons

For: cash arrives within days of invoicing; the limit tracks your sales; no property security for most facilities; useful even with a patchy credit file.

Against: only works for B2B invoices; can cost more than a bank overdraft; whole-ledger facilities can lock you in; disclosed factoring changes how customers deal with you.

When another option might suit better

• A bank overdraft or line of credit is often cheaper if you qualify. See invoice finance vs an overdraft.
• Paying suppliers before you can invoice? Trade finance funds the purchase side instead.
• Selling to consumers or billing in advance? A business line of credit or short-term loan fits better.
• Need a bigger lump sum and own property? A secured business loan may cost less.

Waiting on customers and short on cash?

Slow payers are one of the most common reasons sound businesses run short, and it’s rarely a sign anything is wrong with the business itself. We review debtor ledgers all the time and can quickly judge which facility, receivables-based or otherwise, would ease the pressure at the lowest overall cost.

Enquiring is roughly a minute’s effort, and doing so carries no credit check. We keep your information to ourselves instead of sending it out to multiple financiers, and a specialist gets in touch by phone to understand your customers and terms. Accurate answers about your monthly invoicing and who your customers are make it far more likely we’ll suggest the right facility first.

Unlock cash from your invoices →