Best Invoice Finance Rates Australia (Debtor Finance)

Apply for invoice financing in 3 steps

We’ll do the hard work to get invoice finance set up for your business.

Step 1

Tell us what you need

This helps us find providers and products to match your business requirements.

Get started

Step 2

Compare your options

We’ll talk you through the various options and which may ultimately be most suitable.

Compare now

Step 3

We take it from there

We’ll take care of the application with your chosen provider to get things set up smoothly.

Apply today

What is invoice finance?

Invoice finance allows a business to access funding by selling its outstanding invoices to a lender or third-party company (known as a factor) who advances 80-85% of the invoice amount.

Also known as debtor finance, it’s a specialist form of business finance offering quick access to funds, without taking on a business loan that will accrue interest. It also doesn’t require collateral and the amount you can borrow will be relative to the value of your invoices (minus the factor’s fee).

The factor facilitating the finance is a third party that buys invoices from businesses for a portion of the invoice value.

Smoothing over cashflow is the most common reason businesses apply for finance according to business lending data. Invoice finance is often used by companies experiencing regular payment delays from customers, including labour hire, manufacturing, mining services, commercial property services and construction.

Money's asset finance expert, Phil Collard

Phil Collard, Business Finance Expert

“There are certain industries that suffer more from seasonality and experience peaks and troughs with their cash flow throughout the course of the year. The construction space is a pretty common one, particularly where you have that end of year and January shutdown across most builders. These businesses coming to us are potentially going up to eight or 12 weeks without being paid. They still need to run their business and cover their overheads. The solution we're looking to provide is to smooth out those bumpy roads in cash flow.”

Phil Collard, Business Finance Expert

Simple setup
It's easy to set up and usually integrates with your invoice software (e.g. MYOB, Xero).
Easy to manage
Most lenders have a borrower dashboard that allows you to easily manage invoices.
Quick access to funds
Once set up, it offers very fast access to cashflow with funds release instantly in some cases.
Plenty of choice
It's offered by a variety of business finance lenders, from major banks to specialist non-bank lenders.
Allows you to offer payment terms
It's highly beneficial to small businesses and enables you to offer competitive payment terms to customers.
Outsource payment collection
If the provider takes on responsibility for collecting payment from your customers, this is one less thing for you to manage in-house.
Benefits businesses with reliable customers
Can be particularly useful if your business has reliable customers, as the factor may credit check your debtors.
No security required
There’s usually no additional security (e.g. property) required as the invoices secure the finance.

One potential drawback of debtor finance is the fact that by selling your invoices to a third party, your business may lose control over part of the sales process. In other words, instead of paying you, your customers may need to make payments to a third party.

For this reason, some business choose to keep their invoice payment collection in-house and use other sources of short-term business finance instead, including the likes of unsecured business loans and options for accessing a revolving business line of credit from a lender – for example, through a business overdraft.

	ABR Finance
Max credit available	80% of value of invoice
Speed of payment	Instant
	APositive
Max credit available	90% of value of invoice
Speed of payment	The same day
	Butn
Max credit available	85% of value of invoice
Speed of payment	In a matter of minutes
	CommBank
Max credit available	80% of value of invoice
Speed of payment	In real time
	Earlypay
Max credit available	80% of value of invoice ($100K - $10 million)
Speed of payment	Instant
	Fifo Capital
Max credit available	80% of value of invoice
Speed of payment	Same business day
	Invoice Financing Australia
Max credit available	$50k - $5 million
Speed of payment	Within 24 hrs
	Invoice Money
Max credit available	90% of value of invoice
Speed of payment	Within 24 hrs
	NAB
Max credit available	85% of value of invoice
Speed of payment	Within moments in most cases
	Octet
Max credit available	85% of value of invoice (up to $2m)
Speed of payment	Within 24 hrs
	Westpac
Max credit available	85% of value of invoice
Speed of payment	Within minutes (business days)

	Max credit available	Speed of payment
ABR Finance	80% of value of invoice	Instant
APositive	90% of value of invoice	The same day
Butn	85% of value of invoice	In a matter of minutes
CommBank	80% of value of invoice	In real time
Earlypay	80% of value of invoice ($100K - $10 million)	Instant
Fifo Capital	80% of value of invoice	Same business day
Invoice Financing Australia	$50k - $5 million	Within 24 hrs
Invoice Money	90% of value of invoice	Within 24 hrs
NAB	85% of value of invoice	Within moments in most cases
Octet	85% of value of invoice (up to $2m)	Within 24 hrs
Westpac	85% of value of invoice	Within minutes (business days)

You can qualify for invoice finance if you operate a business that provides a service or product to customers without immediate payment, i.e. your business sends an invoice to customers.

Here are some of the other main eligibility criteria:

Own a business with an ABN

Business is registered for GST

You are a citizen or permanent resident

Business has been operating for six months+

Business has invoices outstanding with customers

Uses an accounting software program (i.e. Xero, MYOB)

Business meets the lender’s minimum revenue requirements

How does invoice finance work? (6 steps)

Here's a simple example demonstrating how invoice finance works:

You send an invoice to a customer for $20,000

You submit the invoice to the factor (lender)

The factor company agrees to charge you a fee of 3% on the invoice amount ($600)

The factor advances you a majority of the invoice amount in advance (85% or $17,000)

The customer makes payment to the factor’s nominated account

The factor pays you the remaining invoice amount (12% or $2,400) minus their 3% factor fee

The amount you can receive from invoice finance will depend on the value of your invoices and the willingness of the factor to take them on. In general, most factors will advertise a maximum amount of $1 million although some lenders offer a maximum amount of $10 million.

Compare invoice finance options

Invoice finance is often available either as recourse or non-recourse factoring, and through a whole ledger factoring or spot factoring agreement. You can see how these work below, starting with recourse versus non-recourse factoring.

Recourse factoring

With recourse factoring, you sell the debt to a factor but the debtor risk remains with you. If your customer doesn’t pay their invoice, you will have to buy back the invoice, and chase it up yourself. This form of invoice finance can be easier to be approved for.

Non-recourse factoring

You sell the debt as well as the risk to the factor, meaning the factor is responsible for the debt. For this reason, you can expect to pay higher fees and not every factor will offer it. It’s generally only offered on invoices where your customer has a solid credit record and is usually available through non-bank lenders.

Whole ledger factoring

With whole ledger factoring, you are required to sell all invoices relating to a particular customer. This is more restrictive but the fees are generally lower.

Spot factoring/Single invoice funding

Spot factoring allows you to pick and choose which invoices you want to sell. This gives you greater flexibility but there tend to be higher fees.

Invoice finance rates and other costs

Factor fees

The main cost of invoice finance is the ‘factor fee’ — a percentage of the invoice amount, and will generally be 1.5% - 4.5%. The factor fee is the amount taken by the lender in return for their factoring services.

Factor fees will vary depending on the lender, the agreed invoice financing term, the volume of invoices you are factoring, and more.

There are also other considerations specific to your business and customers that will impact the invoice finance fee that applies, including:

The creditworthiness of the customer

The reliability of payment from customers

The industry your business operates in

The payment terms of your invoices — you’ll pay more on an invoice due in 90 days than one due in 30.

Invoice finance interest rates

Some lenders charge interest on the funds you have drawn down against your invoices, either as well as or instead of the factor fee. Invoice finance rates generally start from 7.99% p.a. and can be as high as 20% p.a. or higher for high-risk borrowers.

Interest is only charged on the amount you have actually borrowed (not your full credit limit) until it is repaid.

Other invoice finance fees

Depending on the provider there may also be establishment fees when you set up your account initially and a regular administration fee for maintaining the account. Some providers effectively treat their invoice finance as a line of credit, so the admin fee may be referred to as a ‘line fee’.

The process for setting up invoice finance is fairly simple. As your business won’t be taking on any debt, approval should be quicker than a standard business loan application (with less emphasis on your credit score and history), and will often require less-exhaustive documentation. You’ll need to complete a simple application form and supply supporting documents.

Documents required when applying for invoice finance:

Proof of identity

An ABN and GST registration

A list of your customers

Copies of the invoices you want to factor

A report for your accounts receivables, showing how frequently customers pay their invoices

Business bank statements

Business loan guides and resources

Learn more about your business finance options and how to get the funding you need to grow your business.

Asset finance

Revolving credit

Specialised finance

Calculators

More FAQs about invoice finance

Will my customers know I’m using an invoice factor company?

If your factoring company is using invoice discounting, then their collection method to customers will be anonymous. Generally, standard factoring will indicate to a customer that their invoices have been sold. Factoring companies will indicate which type of collection they use, so be sure to research carefully if this is a major concern for your business.

What happens if a customer pays the business instead of the factor?

If you’ve sold your invoices to a factoring company and the customer accidentally pays you instead, it’s important that you indicate this to the factoring company as soon as possible. If you remain transparent in the process, you’ll maintain a healthy relationship with the factor.

Who is responsible for collecting payment from the customer?

The factor will be responsible for collecting payment from your customers. However, depending on the type of invoice finance you agree to, you may be required to buy back any unpaid invoices from the factor and seek to collect payment from customers yourself.

What happens if a customer doesn’t pay an invoice to a factor?

This depends on which type of invoice finance (factoring) agreement you enter into.

With recourse factoring, the company you sold the invoice to may have the right to sell the invoice back to you, in which case it will be up to you to take further action to seek payment from the customer.

If it's a non-recourse factoring agreement, the company that purchased the invoice is responsible for seeking payment and would need to take its own steps to collect payment from the customer.

Are there risks with invoice finance?

Yes, invoice finance is not risk-free for your business as it involves accessing credit. But it is arguably less risky than other forms of finance as you are leveraging funds you are owed as opposed to business assets to secure the finance.

The main risk with invoice finance is that your customer does not pay the invoice amount, leaving you with a balance to repay to the lender but no customer funds to use. The risk of non-payment exists whether you access invoice finance or not, but the fees involved in invoice financing amplify the possible downside of non-payment.

There is also the risk that using a third party to effectively collect your debts will impact your customer relationships, but invoice finance is an increasingly common cashflow tool and most other business owners will be comfortable with the arrangement.

Do banks offer invoice financing?

Most of the major banks in Australia offer some version of invoice finance to business customers. However, beyond the majors, not many other traditional banks offer debtor finance. It’s more commonly offered by specialist non-bank lenders.

Is there a minimum amount I can access through invoice finance?

Generally, yes. You’ll usually need a credit limit of at least $50k in order to establish an invoice finance facility. There may also be a minimum limit on individual invoices.

Can I use invoice finance if my customers are overseas?

Yes, some invoice finance providers support international invoices, but this depends on the provider and the risk profile of your overseas customers. It's best to check whether the factor has experience with international debtors.

Does invoice finance affect my credit score?

Generally, no. Invoice finance is not a traditional loan and doesn’t appear as debt on your balance sheet. However, some lenders may perform a credit check on your customers whose invoices they would be purchasing.

How confidential is invoice finance?

Some lenders offer entirely confidential invoice financing where there is no hint to your customers that a third party is involved. In other cases, your customer will need to pay the factor company directly. If confidentiality is important to you, check upfront with the lender how the process will work.

Can I choose which invoices to finance?

Yes, with spot factoring you can select individual invoices you want to borrow against. If you choose whole ledger factoring, you may be required to finance all invoices from certain customers or your entire debtor book.

How long does it take to get set up?

Most providers have an online portal you can apply through, with approval times typically ranging from five minutes to a few days depending on who you apply with.

Can startups use invoice finance?

Most lenders prefer businesses with at least 6–12 months trading history, but some providers will work with newer businesses if they have strong invoices and reliable customers.

Best Invoice Finance Options & Rates Australia