Turn unpaid invoices into working capital.

Invoice finance lets you draw an advance against unpaid customer invoices, typically 80 to 90 per cent of the invoice value, within 24 to 48 hours of issuing the invoice. When your customer pays, the financier releases the remaining balance less their fees. It turns money you have already earned into working capital without waiting 30, 60 or 90 days for payment. It is used by businesses that sell to other businesses on payment terms, such as wholesalers, labour hire, transport and manufacturing.

Only if you choose a disclosed facility. Confidential invoice discounting is widely available in Australia and your customers continue to pay you directly, with no notice on the invoice. Disclosed factoring notifies customers to pay the financier, which some businesses prefer because collections are handled for them. Your broker explains which lenders offer confidential facilities and what each requires, such as a minimum turnover or an established ledger.

Invoice finance is usually priced as a discount charge on the funds advanced, quoted as a rate for each 30 days the invoice is outstanding, plus a service or administration fee on the invoice value. The total cost depends on how long your customers take to pay, the size of your ledger and the quality of your customers. The clearest comparison is the cost per $1,000 of invoices financed over your typical payment cycle, which your broker calculates for each lender before you decide.

Eligible invoices are for goods delivered or services completed, issued to another business or a government body on standard payment terms, usually 30 to 90 days. Invoices to consumers, invoices for work not yet finished, progress claims under construction contracts and disputed invoices are generally excluded. Lenders also look at the creditworthiness of your customers, because they are the ones who ultimately pay. A spread of reliable customers strengthens the application.

Invoice finance is an advance against money you are already owed rather than a term loan, so there is no fixed repayment schedule; the invoice settles the balance when the customer pays. The facility limit grows with your sales, which is why it suits fast-growing businesses. How it appears on your balance sheet depends on the structure, so ask your accountant. Lenders register their interest in your receivables on the PPSR, which can affect other borrowing secured by the same assets.

Setting up a facility usually takes one to two weeks, because the lender verifies your customers and your ledger. Once it is in place, funds against a new invoice are typically advanced within 24 to 48 hours, and some lenders pay the same day. Businesses that invoice regularly find the ongoing speed is the real benefit: every invoice becomes cash within days rather than months.

Often, yes. Invoice finance is assessed mainly on the quality of your customers and your invoices rather than on your own trading history, so newer businesses and businesses with past credit issues can qualify where a term loan would be declined. Lenders still check the business and its directors, and some set a minimum monthly invoicing level. Lyft Money checks fit across the panel before anything is submitted, so a decline elsewhere does not rule you out.

Trade finance funds the purchase side of the cycle, paying suppliers before goods arrive or sell. Invoice finance funds the sales side, advancing cash against invoices you have already issued. Many wholesalers and importers use both together: trade finance pays the supplier, the goods are sold, and invoice finance releases cash from the resulting invoices to repay the trade facility. Your broker checks that the two lenders’ security interests are compatible before setting both up.

Timing depends on the lender, your application and the documents available. Tell us your deadline so we can explain the likely timing and what is needed to move forward. Funding is subject to lender approval and completion of any conditions.

With invoice factoring the financier manages your sales ledger and collects payment from your customers, who are usually told about the arrangement. With invoice discounting you keep control of collections and the facility can be confidential, so customers pay you as normal. Factoring suits smaller businesses that want the collections handled; discounting suits businesses with an established credit control process. Both advance funds against the same invoices, and the cost and eligibility differ between lenders.