What is invoice finance?
Invoice finance is a funding facility that advances you a percentage of the value of your unpaid invoices — commonly the majority of the invoice value — as soon as you issue them, rather than when your customer eventually pays. Once your customer pays the invoice, you receive the remaining balance, less the lender's fee.
Because the invoices themselves (and the customers who owe them) are effectively the security behind the facility, invoice finance doesn't require property as collateral. It's a way to convert your sales ledger into working capital.
How much can a facility provide?
Invoice finance facilities scale with the size of your outstanding invoices (your debtor book), rather than sitting at a fixed amount like a term loan. Smaller businesses might access facilities in the tens of thousands of dollars, while larger businesses with substantial B2B sales ledgers can access facilities worth many millions.
- No property security required — the invoices are the security
- Facility size scales with your sales ledger, not a fixed cap
- Funds are typically available as soon as an invoice is issued
Who is invoice finance suited to?
Invoice finance is most useful for businesses that invoice other businesses (rather than end consumers) on payment terms of 30, 60, or 90 days, and need to bridge the gap between doing the work and getting paid.
- Wholesale and manufacturing businesses supplying other businesses
- Labour hire, staffing, and recruitment businesses with regular payroll to fund
- Trade and transport businesses invoicing large customers on extended terms
- Any B2B business with a growing sales ledger but tight day-to-day cash flow