Invoice finance

How does invoice finance work?

You issue an invoice as normal, submit or sync it with the lender, and receive an advance (typically 80% to 90% of the invoice value), within a day or two. When your customer pays, the lender releases the remaining balance minus their fee. With modern facilities, the “submit” step disappears entirely: your accounting software (Xero, MYOB and similar) connects directly to the lender, and eligible invoices are advanced automatically as they’re raised.

• 01With certain lenders, your accounting software connects directly to the facility, cash releases against new invoices without manual submission each time.
• 02Whether your customers know you’re using invoice finance depends on the lender and structure, not the product itself. Some require disclosure; others run confidentially.
• 03As with our other products, the cheaper the rate, the more a lender will typically want by way of personal guarantees or additional security.
• 04It isn’t automatically the more expensive option compared to other finance types, and unlike a term loan, you draw against it when you actually need to, not on a fixed schedule.

What’s the difference between invoice factoring and invoice discounting?

Factoring is disclosed, the lender takes over collecting payment from your customers directly, and they’ll know a financier is involved. Discounting keeps you in control of your own ledger and customer relationships; your customers keep paying you as normal, and the arrangement can stay confidential. Selective invoice finance is a third variant, you choose which individual invoices to fund rather than financing your whole sales ledger.

Which structure fits depends on your business, not a fixed rule, some owners are entirely comfortable with disclosure, others need confidentiality preserved. This is exactly the kind of preference we match to a lender before applying, rather than defaulting to whichever structure a single provider happens to offer.

Is invoice finance secured or unsecured?

The invoices themselves are the primary security, which is why property backing usually isn’t required the way it can be for a term loan or line of credit. That said, the same pattern holds here as everywhere else: the cheaper the rate on offer, the more a lender will typically want in return, usually a director’s guarantee, sometimes a general security agreement over business assets.

Why work with a broker instead of comparing lenders yourself?

Because the details that actually matter, whether your customers need to know, how much a lender wants by way of guarantees, whether the facility integrates with your accounting software or expects manual submissions, rarely show up clearly on a comparison page. A broker matches those preferences to the right lender before you apply, not after you’re locked in. (More on how a business loan broker actually works.)

We also know which lenders on our panel have genuinely automated the process and which still run on manual invoice uploads, a real difference in how much ongoing admin the facility creates for you.

What does invoice finance cost?

It isn’t automatically more expensive than other finance types, despite the reputation. Cost depends on the lender, your customer credit quality and how the facility is structured, and the same rule applies as with our other products: the cheaper the rate, the more a lender will typically want by way of personal guarantees or additional security. One genuine advantage over a term loan is flexibility, you draw against invoice finance when you actually need to, rather than committing to a fixed repayment schedule regardless of whether the cash is needed. Our invoice finance calculator lets you model the advance and fee against your own invoices.

Ecommerce Loans is a finance broker, not a lender. Rates and figures shown are indicative only and subject to individual lender assessment.

When is invoice finance not the right call?