See which lenders will give you the best invoice finance. Instant online results.
This is a totally free process and will not affect your credit rating.
Borrow from $5,000 to $500,000
Fixed or variable interest rates
Repayments to suit your budget
Terms from 1 month to 5 years
Secured & unsecured options
Own a business and have an ABN
Business is GST-registered
Permanent Citizenship or Residency
Minimum business-operating time of six months
Can provide business bank statements
Invoice finance — also known as accounts receivable finance, or factoring — is a type of business finance that allows a business to sell its outstanding accounts receivables (invoices) to a third party for a percentage of the total invoice amount.
It allows a business to access funds quickly, without taking on a business loan that will accrue interest.
Invoice finance is known as ‘factoring’. A factor is a third party that finances outstanding accounts receivable (invoices).
The factor will buy invoices from a business, then collect full payment from the customer and pay the business the remainder of the invoice, keeping a pre-agreed percentage as their fee.
Invoice Finance in Seven Simple Steps:
You send an invoice to a customer for $20,000
You send the invoice to the factor
The factor company agrees to charge you a fee (~3%) on the invoice amount
The factor advances you a majority of the invoice amount in advance (85%)
The factor awaits payment from your customer
The customer makes payment to the factor
The factor pays you the remaining invoice amount (12%) minus their 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 $1,000,000 although some lenders offer a maximum amount of $100,000,000.
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 in the tables below.
Invoice finance uses a ‘factor fee’ — a percentage of the invoice amount, and will generally be between 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, 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.
How to compare invoice financing providers
Advance fees — if your company is financially secure, you’ll likely receive a rate around 3%. However, if a lender has reason to believe your customers are at risk of not paying, they may increase this significantly.
Additional fees — transaction fees or early payment discounts applied to your customer invoices.
Penalties — each lender will have an individual policy around non-payment or late payment from your customers. It’s crucial you understand these to ensure you aren’t left with an unserviceable debt.
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.
While many different types of businesses can apply, it is often most beneficial to businesses that have to pay up-front costs to operate.
In Australia, invoice finance is often used by companies experiencing regular payment delays from customers, including:
Commercial property services
Most lenders will be able to provide invoice finance if you have:
Been trading for at least 6 months; and
Have an ABN (Australian Business Number); and
Are registered for GST; and
Operate a business that invoices customers; and
Use an accounting software program (i.e. Xero, MYOB)
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 loan application, and will often require less-exhaustive documentation.
You’ll need to complete a simple application form and supply supporting documents.
Here’s what you may need to provide to a lender when applying:
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
Invoice finance is a common form of business finance in Australia, where a business will sell its invoices to a third-party company (a factor) who in return will advance a large portion of the invoice amount to the business.
It doesn’t require collateral and the amount you can borrow will be equal to the value of your invoices (minus the factor’s fee).
Is easy to set up
Is offered by a variety of business finance lenders
Once set up, allows for very fast access to cash
Is highly beneficial to small businesses or those operating with upfront costs
Uses outsourced payment collection for a small fee
Can be very useful if your business has reliable customers