Invoice finance for Melbourne and Victorian businesses
Invoice finance lets a business draw cash against invoices it has already raised, instead of waiting 30, 60 or 90 days to be paid. Even Financial Melbourne helps businesses compare invoice finance options from a panel of lenders and understand the terms before they commit.
How invoice finance can work
You raise an invoice, and the lender advances a percentage of its value, commonly 80% to 90%, though this varies by lender. When your customer pays, the lender releases the balance, less its fees. For a plain-language walkthrough, read our article What is invoice finance?
The main types
- Factoring: the lender may collect payment from your customers, who are usually told about the arrangement.
- Invoice discounting: you keep collecting from your customers, and the arrangement can stay confidential.
- Selective: you choose which invoices to finance, which gives more flexibility.
- Whole ledger: you agree to finance all invoices, or all invoices to certain customers. It is less flexible but can be cheaper.
Which structures are available depends on your business, your customers and each lender’s criteria. All finance is subject to lender approval, fees and charges.
Who invoice finance is for
Businesses that invoice other businesses on payment terms, such as trade subcontractors, transport operators, wholesalers, manufacturers and labour hire firms, where wages and suppliers must be paid before customers pay you. It is generally not suited to businesses paid at the point of sale. If you need a flexible limit rather than funding against invoices, see our business cash flow finance page.
How it works with us
- Tell us about your business. Send an enquiry with your ABN, how long you have been trading and how you invoice your customers.
- We compare options. We look at lenders from our panel and explain the structures, fees and trade-offs in plain language.
- You choose. If you want to proceed, we help prepare the application and supporting documents.
- The lender assesses it. Approval, terms and any set-up are up to the lender.
What lenders commonly look for
Requirements differ by lender, but commonly include:
- An ABN and some trading history
- Invoices owed by creditworthy business customers
- Accounting software such as Xero or MYOB so invoices can be checked and funded quickly
- Details of your customers and unpaid invoices, and of existing debts and commitments
- Photo ID for the applicants and guarantors
What to weigh up
- Total cost. Costs vary by lender and can include service fees, discount charges or interest, and establishment fees. Compare the total cost, not only the headline figure.
- Timing gaps, not long-term funding. Used long term, it can cost more than a traditional loan, so it is best matched to genuine timing gaps.
- If a customer does not pay. Check who is responsible (recourse or non-recourse).
- Customer relationships. Consider whether you are comfortable with customers being told, as with factoring.
- Tax. Speak to your accountant before you decide.
For how to compare the cost of different finance options, see Interest rate vs repayment: finding the right balance.
Related reading
Invoice finance FAQs
Is invoice finance a loan?
It is a way of drawing cash against invoices you have already raised. Depending on the structure, the lender advances part of each invoice's value and releases the balance, less fees, when your customer pays. Terms differ between lenders, and any finance is subject to lender approval.
What is the difference between factoring and invoice discounting?
With factoring, the lender may collect payment from your customers, who are usually told about the arrangement. With invoice discounting, you keep collecting from your customers and the arrangement can stay confidential. Which is available depends on the lender and your business.
How much of an invoice can I draw?
Lenders commonly advance around 80% to 90% of an invoice's value, but this varies by lender, customer and facility. The balance, less fees, is generally released when your customer pays.
Will my customers know I am using invoice finance?
It depends on the structure. Factoring usually involves customers being told, while invoice discounting is generally confidential. We can explain the difference for the lenders that may suit you.
Is invoice finance suitable for any business?
It generally suits businesses that invoice other businesses on payment terms. It is usually not suited to businesses paid at the point of sale. Eligibility depends on each lender's criteria.
Does invoice finance affect my tax?
Tax treatment depends on your business structure and circumstances. This page is general information only. Please speak to your accountant.
Is sending an enquiry the same as applying?
No. An enquiry lets us understand your situation and talk through the options. Any finance is subject to lender approval, fees and charges, and eligibility criteria.