Quick answer
Invoice finance lets a New Zealand business borrow against invoices its customers haven't paid yet. The lender advances part of the invoice value now and the balance, less fees, when the customer pays. It suits businesses that sell to other businesses on 30 to 90 day terms. Setting up a facility takes some time because the lender reviews your debtors, but once it's running, cash can follow each new invoice quickly.
Key points
- Unlocks cash tied up in unpaid business-to-business invoices.
- Size grows with your sales — more invoices, more available funding.
- Setup involves a review of your debtor book; ongoing draws are fast.
- For a one-off urgent gap, a quick cash flow loan may be faster.
- Security
- Unpaid invoices
- Best for
- B2B sales on 30–90 day terms
- Setup
- Debtor review first
For many business-to-business companies, the problem isn’t sales. It’s waiting. You deliver in March, invoice in April and get paid in late May — while wages, suppliers and GST don’t wait. Invoice finance turns that waiting time into cash, by lending against the money your customers already owe you.
How does invoice finance work?
The basic sequence:
- You issue an invoice to a business customer.
- The lender advances a portion of its value — often within a short time of the invoice being verified.
- Your customer pays on their normal terms.
- The lender releases the balance, less its fees.
As your sales grow, the funding available grows with them. That’s what makes it different from a fixed loan.
Who is invoice finance best for?
| Good fit | Poorer fit |
|---|---|
| Wholesalers, manufacturers, distributors | Retail and hospitality (customers pay on the spot) |
| Labour hire and staffing | Businesses selling mainly to consumers |
| Trades and contractors with commercial clients | Very small invoice volumes |
| Transport and logistics | Customers with poor payment history |
How fast can it move?
Two speeds matter:
- Setup. The lender reviews your debtor ledger, customer concentration, payment history and contracts. That takes longer than a simple loan.
- Ongoing draws. Once the facility is running, funds can follow new invoices quickly.
So invoice finance is a great tool to set up before the crunch. If you need money tomorrow for a single gap, a cash flow loan or working capital loan is often faster.
What will the lender look at?
- Your debtors: who they are, how reliably they pay, how concentrated your sales are.
- Your invoices: clear terms, proof of delivery, no disputes.
- Your statements: how customer payments flow through the account.
- Security registrations: lenders typically register their interest on the PPSR, the online register for security interests over personal property, which includes accounts receivable.
What should I prepare?
- An aged debtors report from your accounting software.
- Sample invoices and proof of delivery.
- Key customer contracts or terms.
- Six months of bank statements.
- ID and company details.
Then start an enquiry and mention you’re interested in invoice finance.
What are the trade-offs?
- Cost: fees are charged on what you use, and the total depends on volume and terms — ask for a full breakdown.
- Customer visibility: some facilities involve your customers paying the lender directly.
- Commitment: some facilities have minimum terms or volumes.
How does invoice finance compare with a line of credit?
| Feature | Invoice finance | Line of credit |
|---|---|---|
| Linked to | Your unpaid invoices | Your overall trading |
| Grows with sales | Automatically | Needs a limit review |
| Setup | Debtor review | Statement review |
| Best for | B2B sellers with long terms | Any business with recurring gaps |
See business line of credit for the alternative.
How do I get paid faster without finance?
Invoice finance works best alongside good credit control. Send invoices the day work is completed, with clear due dates and easy payment options. Agree payment terms in writing before you start a job, not after. Follow up on the day an invoice falls due, then again a week later. For new or larger customers, check their credit before extending generous terms, and consider part-payments up front on big jobs. Every day you shave off your average collection time is a day less funding you need — whether from a facility, a loan or your own cash reserves.
What does a lender look for in my debtor book?
Invoice finance lives or dies on the quality of the invoices behind it, so the debtor review is where the lender spends its time. Expect questions about:
- Who your customers are. Established businesses and public bodies with good payment records are the strongest.
- Concentration. If one customer makes up most of your invoices, the facility may limit how much is advanced against them.
- Age of invoices. Invoices that are long overdue are usually excluded.
- Disputes and credits. Regular disputes or credit notes reduce what can be funded.
- Contract terms. Retentions, progress claims and conditions can affect what counts as a fundable invoice.
An aged debtors report from your accounting software answers most of these in one page. Tidy it up before you apply: chase very old invoices, write off ones that will never be paid, and make sure customer details are current. A clean ledger shortens the setup and increases the amount you can draw against each new invoice.
Can I finance just a few invoices?
Some facilities let you choose which invoices to fund, while others cover your whole ledger. Selective funding suits occasional gaps; whole-ledger facilities suit constant ones. Ask which model is on offer before you commit.
Illustrative example: a labour-hire firm
Illustrative only. A Hamilton labour-hire company pays staff weekly while clients pay on 45-day terms. As it wins more contracts, the gap widens. It sets up an invoice finance facility over two weeks during a quiet period. Now each week’s invoices unlock funds within days, and payroll is never a scramble. For a sudden one-off gap before the facility was ready, it used a short unsecured loan.
Money tied up in invoices?
Tell us how much is owed to you, by whom and on what terms. Enquiring takes about a minute and there’s no credit check when you first enquire. Your details don’t get forwarded to an army of lenders — a real person reads them and calls you. Please give accurate debtor figures so we can suggest the right structure first time.
Frequently asked questions
What is invoice finance?
Funding secured against your unpaid customer invoices. The lender advances part of each invoice's value up front and pays the rest, less fees, once your customer pays.
Is invoice finance the same as factoring?
Factoring is one form of invoice finance, where the lender typically manages collection. Other forms leave collection with you. Ask which model a facility uses.
Will my customers know?
It depends on the facility. Some are disclosed to customers, some aren't. The specialist will explain how a particular facility works.
How fast is invoice finance?
Setting up takes longer than a simple loan because your debtors are reviewed. Once running, funds against new invoices can be released quickly.
Does it work for sales to consumers?
Generally no. Invoice finance relies on business customers with reliable payment records.