Invoice finance online: borrowing on what customers owe you

If your customers are other businesses, you probably wait to be paid. You do the work, send the invoice, and then the money sits in someone else’s account for 30, 45 or 60 days. Meanwhile your wages, suppliers and tax bills don’t wait. Invoice finance closes that gap by turning invoices into cash soon after they’re issued.

The old version of this product involved posting batches of invoices and schedules to a funder. The online version plugs into your accounting software, reads your sales ledger, and lets you draw against approved invoices from a dashboard.

How does borrowing on your invoices work?

The basic mechanics are the same across most providers:

1. You issue an invoice to a business customer as usual.
2. The funder sees the invoice — through an accounting connection or an upload — and checks it against its criteria.
3. You receive an advance, typically a majority share of the invoice value, often within a short time of approval.
4. Your customer pays on their normal terms.
5. The funder releases the remaining balance to you, less its fees.

Because the security is your receivables, the funder cares a lot about who owes you the money. A ledger full of established customers with clean payment histories is easier to fund than one concentrated in a single slow-paying client.

Which businesses suit invoice finance best?

Invoice finance tends to fit businesses that:

• sell to other businesses or government on account
• offer payment terms of roughly two weeks to three months
• are growing, so the ledger expands faster than cash
• have reliable debtors but a lumpy cash cycle

Common examples include digital agencies on monthly retainers and project milestones, IT and managed service providers billing businesses for contracts, wholesalers, labour-hire and professional services. It doesn’t suit businesses selling mainly to consumers at the point of sale — for those, a line of credit or revenue-linked product is usually a better match.

What do online invoice lenders look at?

Area	What they check
Aged receivables	How old your unpaid invoices are and how many are overdue
Debtor concentration	Whether one customer makes up a large share of the ledger
Customer quality	Trading history and payment behaviour of your debtors
Credit notes and disputes	How often invoices are reduced or contested
Your own records	Whether invoices reconcile to bank deposits

If your accounting file is messy — old unpaid invoices that were really written off, duplicate contacts, credit notes never applied — tidy it before you connect. The lender’s software reads exactly what’s there. See our guide to accounting software connections for a pre-connection checklist.

Factoring or discounting — which is which?

Factoring typically means the funder takes over collections and your customers are told to pay the funder. It can suit smaller businesses that don’t have someone chasing debtors.

Discounting typically means you keep control of collections and the arrangement can be confidential. It usually suits more established businesses with good credit control.

There’s also selective invoice finance, where you choose individual invoices to fund rather than the whole ledger. It’s useful for occasional large contracts. If you’re weighing these up, a specialist can explain how each would work for your ledger — start an online enquiry here.

How does e-invoicing change things?

The ATO is the Australian Peppol Authority, overseeing the eInvoicing framework that lets businesses exchange structured invoices directly between accounting systems through accredited providers. The ATO notes it does not receive copies of the eInvoices themselves. For invoice finance, structured e-invoices can make invoices easier to verify, because the data arrives in a standard format rather than as a PDF attachment. Whether a particular funder uses that data varies, but well-structured, consistent invoicing never hurts an application.

What does invoice finance cost?

Costs are usually a combination of a service or facility fee and a charge on the funds advanced for the time they’re outstanding. Some providers also charge per-invoice fees. Because the total depends heavily on how quickly your customers pay, ask for an illustrative total cost for one of your typical invoices before committing. We don’t quote rates: each facility is priced on the business, its ledger and its customers.

How do you get your ledger ready to connect?

A clean ledger gets approved faster and supports a bigger facility. Before you connect your accounting software, spend an hour on these:

1. Write off or credit invoices you know will never be paid, so the aged receivables report is honest.
2. Merge duplicate customer contacts so concentration reports are accurate.
3. Make sure every invoice shows the customer’s legal name and ABN where possible.
4. Reconcile your bank feed so receipts are matched to the invoices they paid.
5. Note any customers on extended or unusual terms, and why.

What does an illustrative month look like?

A design studio (illustrative) issues $90,000 of invoices to corporate clients on 30-day terms. With a facility in place, it receives an advance on the approved invoices within a short time of issuing them, pays its contractors and wages on time, and receives the remaining balance, less fees, as each client pays. The studio’s cash position no longer depends on which client pays slowest that month.

Ready to free up cash tied in your invoices?

If slow-paying customers are holding your growth back, it’s worth finding out what your ledger could support. Tell us about your business in a 60-second enquiry — there’s no credit check at that stage, your details go to one specialist instead of being sent around the market, and a real person will call to talk through your customers and terms. The more accurately you describe your debtors and invoice terms in the form, the better we can match the right structure first time.