Invoice Finance: A Complete Guide

Invoice financing, or debtor finance, is on the rise in Australia as SMEs become increasingly aware of alternative forms of finance. Lenders, more often than not, prefer some form of security in the lending process too. If you’re an Australian SME looking to understand more about invoice financing for small business then we have you covered here. 

We’ll explain how invoice debtor finance differs slightly to invoice factoring, the full suite of invoice finance products available in the market today and the invoice financing companies who provide them. We’ll also run through what makes a business a good fit for small business invoice factoring/invoice financing and whether they’re better off seeking online invoice factoring companies or a solution from a big bank like Westpac invoice finance.

Loan TypeSecuritiesTermsAvg Loan SizeEstimated Interest Rate
Invoice FinanceInvoices3-180 days$10,0003%-5%

Best Invoice Factoring in Australia for 2023 (Debtor Finance)

#1 ScotPac

  • One of Australia’s Largest Invoice Factoring Companies and First Working Capital Specialists, 250 People in Staff
  • Borrow from $10k to $150m
  • Doesn’t Require Any Additional Securities Other Than Unpaid Invoices
  • Offers Invoice Discounting Solution, On Top of Regular Invoice Financing (Key Difference is That Customers Won’t Be Aware Your Business is Financing with Invoice Discounting)
  • Offers Many Other Means of Business Financing
  • TheAdviser Awards Winner
  • Easy Online System
  • Good Reviews on TrustPilot
  • ScotPac Review

#2 EarlyPay

  • Lines of Credit from $50k to $15m
  • Interest Rate Advertised as 4.95% to 11.95% (per year)
  • Approval in 24h
  • No Need for Additional Securities other than Accounts Receivable
  • EarlyPay Review

#3 Butn (ButnX Product)

  • Operating Since 2015 and Processed $500m in Funding
  • Borrow up to $75,000
  • Flexibility in Payouts
  • Easy to Integrate
  • Butn Review

#4 Fifo

  • 2005 Founded, Operating in Australia Since 2007 (NZ Headquartered)
  • No Property Required
  • No Hidden Fees
  • Easy to Sign Up
  • Flexible Terms
  • Not Many Customer Reviews Online
  • Fifo Review

#5 Moneytech Business Loans

  • Access $150,000-$20m in Funding
  • 120 Day Recourse Periods (30 Days more than Industry’s Average)
  • Not Need for Securities
  • Additional Functionality of FX Payments
  • We Could Not Find Customer Reviews Online
  • Moneytech Review

How to Apply to Top 5 Invoice Financing via a Single Form?

Lend ( is an industry leader in Australian business finance, and works with multiple lenders who specialise in invoice financing for small business. It is an easier and faster solution for any business owner who’s looking to save time and discover the most appropriate lender in just a few minutes. Simply input business details on Lend’s application form and wait for the platform to do all the legwork, scanning 50+ lenders for the best fit.

Editorial Rating: 99.2%




Other Notable Invoice Factoring Companies in Australia:


Through Marketland’s ‘Debtor Finance’ Solution businesses can opt for either single or multi debtor solutions. Once a debtor is approved businesses can submit invoices for financing from this debtor for a period of up to 60 days for value between $100k to $4m.


Skippr is one of the most specialised invoice financing companies out there and offers the most complete set of solutions when it comes to invoice finance in Australia.This includes; invoice factoring, invoice discounting and single invoice finance. With a maximum credit limit of $500k. Most specialist finance providers outside of the big 4 banks only offer invoice factoring (i.e. the debtor book as a whole) so the variety of solutions is a big differentiator. As a USP, Skippr also differentiates themselves from traditional invoice financing companies by integrating with many of the leading accounting software platforms including Xero and Quickbooks. Meaning invoices can automatically be shared with Skippr, removing cumbersome manual upload of invoices that could be prone to errors.

Westpac Invoice Finance

Westpac invoice finance offers a self service online portal for businesses to upload their invoices, allowing up to 85% of the value of the invoice to be paid by Westpac at the point of sale. Crucially, Westpac invoice finance may not be as relevant as a small business invoice factoring facility as lending will only be facilitated at sums of $500k and above. There could also be an arrangement fee to establish the facility in addition to the ongoing fees that Westpac receive each time they finance an invoice.

Dedicated invoice factoring companies or invoice financing companies are likely to prove a better fit for SMEs – it’s very unlikely that a bank would prove the best invoice factoring option unless you have very large business customers with a strong credit history.

What is Invoice Financing?

Invoice finance is a way for businesses to borrow money based on the unpaid invoices due to their business. Invoice Financing helps businesses improve their cash flow and increases the length of time they hold onto cash. It can allow companies to pay suppliers and staff earlier than they could if they were to wait for the money to be paid by their customers. Invoice Finance typically works best for B2B companies with payment terms of 30, 60 or 90 day durations. If you operate a B2C business which sees money exchanged at the point of sale, such as a retail shop or restaurant, then invoice finance may not be an appropriate solution for you. Alternatives, such as a merchant cash advance, may be a better fit.

What Types of Invoice Finance Are There?

In some solutions businesses sell their invoices as assets to their lender and in return receive a fixed percentage of the full value of the invoice at the point of sale. In other solutions there are options to borrow a varying amount of the invoice or borrow against specific invoices. Invoice finance may also be referred to as debtor finance.

Invoice Factoring

Invoice factoring, also sometimes known as accounts receivable factoring, sees businesses sell their accounts receivable as assets to their lending provider. Businesses will receive a percentage of the total value of their invoices from the lender at the point of sale with the lender then collecting the full value of the invoice when payment is due. 

The big difference between invoice factoring companies compared to invoice financing companies is it sees the whole accounts receivable function outsourced to the invoice factoring company so they will chase up customer payments and manage the receivables process on behalf of the business, freeing up time for business owners to focus on other matters. Invoice factoring in Australia is the most common form of SME invoice finance. 

Typical invoice factoring rates are 2% for the first 30 days of lending with an additional 0.5% for every further 10 day period that invoices remain unpaid. Around 80-85% of the invoice is usually paid upfront with the remainder released to the seller once their buyer has paid for the invoice (less the factoring rates).

If we look at the example above, based on a $40,000 invoice, then we can see in scenario A the business would receive 80% of the value of the invoice upfront ($32,000) and a total of $39,200 (minus the 2% factoring charge from the provider). If we look at scenario B then the business would receive $32,000 upfront and only $39,000 overall (minus a 2.5% factoring charge due to an additional 10 day period without the invoice being paid). Note the percentage works similar to interest on a loan but is usually a fixed fee based on the total value of the invoice which can then incur additional fees for longer payment terms.

Spot Factoring

Spot Factoring, also known as selective invoice finance, is a method for businesses to receive finance by selling specific invoices to their lending provider. As businesses will only assign individual invoices when they require finance, they typically don’t have an established relationship with their spot factoring provider.

Just like with invoice factoring the provider will likely want to follow up with customers for payment so it could cause confusion should a customer sometimes be contacted by the seller for payment and sometimes by the spot factoring company.

Invoice Discounting

Rather than selling an invoice as an asset, invoice discounting will see businesses borrowing money from a lender against the value of an invoice. Invoice discounting allows businesses to borrow part of the value of their invoices and continue with the payment collection process themselves. That’s the main difference between factoring and invoice discounting. Invoice discounting can thus often be arranged on a confidential basis so customers aren’t even aware it’s in place. As you only borrow a portion of the total value of the invoice, discounting is generally best suited to businesses with high-value invoices.

Geographical Coverage of Invoice Finance & Invoice Factoring Australia

The best online invoice finance and online invoice factoring companies for small businesses are readily available throughout Australia. Whether you require invoice factoring in Sydney or invoice financing in Adelaide all of the specialist lenders we review hold an Australian Credit Licence with the ASIC to offer invoice financing across Australia. As you would expect, all of the online invoice factoring companies offer an online platform for invoices to be submitted and approved for finance, making it much more convenient and far less reliant to find a local provider. 

Locally, however, Marketland holds its office in Sydney and offers invoice finance in Sydney, Fifo Capital in Melbourne and Skippr holds offices in Sydney, Melbourne and Brisbane.

Invoice Finance for Indigenous Business

Indigenous Business Australia (IBA) provides invoice finance to assist Indigenous-owned businesses to take advantage of new contract or sales opportunities that may otherwise be out of reach. To qualify for invoice finance with IBA, businesses will need to have at least 50 per cent Indigenous ownership.

Despite being a government initiative, invoice factoring rates still apply and are likely to be similar to those offered by the best invoice factoring companies. IBA specifies “Interest rate payable on funds drawn is equivalent to the Reserve Bank’s official cash rate plus a risk margin based on IBA’s credit assessment.” So, like any type of business lending, the risk profile of your business will determine your rate.

Invoice Financing for Small Business – Is It Relevant For Me?

Since new companies, such as Skippr and Markeltand, have entered the Australian lending market, they’ve brought lending facilities that have traditionally only been available to large businesses to SMEs too. Hence why we see the difference in minimum lending amounts in comparison to Westpac invoice finance. Skippr in particular provides many different forms of invoice financing for small businesses.

Generally, the following criteria should be met in order to be eligible for a small business invoice finance facility:

  • You’ve operated for at least 6 months as a registered Australian business
  • Your business has outstanding accounts receivable with other businesses
  • You raise invoices only once your service is complete
  • You and your customers have a good credit history

Discover your invoice finance options today


Many of the invoice factoring services we review on our site also offer unsecured business loans too. These can be great for accelerating growth and investing in new areas for the business. Invoice Financing however serves a different purpose. Organically, businesses will not receive any additional funding to what would have been due to the business from its debtors anyway. Invoice financing simply allows businesses to improve their working capital by receiving funds due from their customers sooner. 

Small Business Invoice Factoring / Financing Grows in Popularity

Invoice Financing for small business is becoming increasingly popular in Australia and the number of specialist invoice financing companies that can help SMEs is growing. Some of which, like EarlyPay, is even traded on the ASX.

If it’s a whole-book solution you’re looking for, online invoice factoring is more advanced than ever. If it’s individual invoices you want discounted, or you want to keep the accounts receivable process in-house, then there are plenty of options when it comes to invoice finance in Australia too. If you think invoice financing sounds like a good fit for your business, then you should be able to receive a better interest rate than through an unsecured business loan.

The unpaid invoices act as security so the invoice factoring companies are likely to grant a more favourable rate. We have provided our recommendations on the best invoice factoring companies but we encourage readers to conduct their own research and find a lender that best fits their own unique requirements.