Compare finance types
Invoice finance vs Merchant cash advance: which is right for your business?
The main difference between a invoice finance and a merchant cash advance is how they are secured and repaid: a invoice finance suits b2b businesses with reliable customers on long payment terms, while a merchant cash advance suits cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season.
Invoice finance vs Merchant cash advance at a glance
| Invoice finance | Merchant cash advance | |
|---|---|---|
| What it is | Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property. | A merchant cash advance is a lump sum advanced against your future card sales, repaid automatically as a small share of each day’s card takings until an agreed total is repaid. Approval is fast, no property security is needed, and repayments rise and fall with your trade. |
| Amount | $20,000 – $5,000,000 | $5,000 – $300,000 |
| Term | 1–12 months | 3–18 months |
| Indicative rate | 8% – 18% p.a. | 25% – 60% p.a. |
| Rate type | Variable | Factor rate |
| Security | Secured by receivables | Unsecured (guarantee may apply) |
| Repayments | Settled when the customer pays each invoice | A set percentage of daily card settlements |
| Typical speed | 24–48 hours per invoice once set up | 24–48 hours |
| Best for | B2B businesses with reliable customers on long payment terms | Cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season |
| Consider the other if | Businesses that sell to consumers or are paid at the point of sale | Businesses paid mostly by invoice or bank transfer, where invoice finance or a line of credit usually fits better |
| Tax | Fees are generally a deductible business expense. | The cost of a business-purpose advance is generally deductible. Confirm the treatment with your accountant. |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
When to choose a invoice finance
A invoice finance is usually the better fit for b2b businesses with reliable customers on long payment terms. Its main advantages are grows with your sales, no property security, can be confidential. Consider the alternative if businesses that sell to consumers or are paid at the point of sale.
When to choose a merchant cash advance
A merchant cash advance is usually the better fit for cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season. Its main advantages are repayments fall automatically in quiet trading periods, funding in 24–48 hours with minimal documentation, no property security required. Consider the alternative if businesses paid mostly by invoice or bank transfer, where invoice finance or a line of credit usually fits better.
Invoice finance
Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property.
Merchant cash advance
A merchant cash advance is a lump sum advanced against your future card sales, repaid automatically as a small share of each day’s card takings until an agreed total is repaid. Approval is fast, no property security is needed, and repayments rise and fall with your trade.