Setting up invoice finance: what funders check

Invoice finance can transform cash flow for a business that sells to other businesses on terms. Getting it set up, though, involves more checking than a standard loan, because the funder is relying on your customers paying. Knowing what they look at helps the process go smoothly.

Step 1: the debtor review

The funder starts with your aged debtors report: who owes you money, how much and for how long. It looks at:

• Customer quality: are they established businesses or government bodies?
• Payment history: do they usually pay close to terms?
• Concentration: does one customer make up a large share of what you are owed?
• Disputes: are any invoices contested?
• Aged balances: how much is well past due?

A clean, well-spread debtor book with reliable payers gets the best terms.

Step 2: eligible invoices

Not every invoice qualifies. Commonly excluded:

• Invoices to consumers rather than businesses.
• Invoices for work not yet completed or goods not delivered.
• Progress claims that are disputed or uncertified.
• Invoices well past their due date.
• Invoices to related businesses.

The value of eligible invoices, multiplied by the advance percentage, is what you can draw.

Curious where you would stand? Ask us directly. Enquiring leaves your credit file untouched, and you will hear back from someone who has actually read what you wrote.

Step 3: disclosed or confidential?

	Disclosed	Confidential
Customers informed	Yes	No
Payments go to	An account controlled by the funder	Your account, then passed on
Collections	Often handled by the funder	Handled by you
Usually suits	Smaller or newer businesses	Larger, established businesses

Step 4: agreeing the terms

Key points to understand before signing:

• Advance percentage: the share of each eligible invoice paid up front.
• Fees: service fees and charges on funds advanced. Compare the total dollar cost over a typical month.
• Concentration limits: caps per customer.
• Recourse: whether you must repay if a customer does not pay. Most small business facilities are with recourse.
• Minimum terms and exit fees: how long you are committed and what leaving costs.
• Security: some funders register security over your receivables on the PPSR.

Step 5: running the facility

Once live, you upload invoices as you raise them, the funder advances against the eligible ones, and the balance is released as customers pay. Good habits make it run smoothly: invoice promptly and accurately, keep customer details current and reconcile payments weekly.

Estimating the benefit

The invoice cash calculator shows how much a batch of invoices could release now, what follows later and the cost per dollar advanced. Compare that with what the cash allows: taking supplier discounts, saying yes to bigger orders or simply paying wages without stress.

Is it the right tool?

If your gap is mostly from slow B2B customers and growing sales, invoice finance is often ideal. If it is from seasonality, tax or one-off costs, a line of credit may suit better. See invoice finance vs line of credit.

Preparing before you apply

You can make the review faster by tidying your ledger first. Chase or write off very old balances, resolve any disputed invoices, make sure customer names and ABNs are correct in your accounting software, and check that invoices clearly show what was delivered and when. A clean ledger tells the funder your processes are sound, which can lead to a better advance percentage and a quicker first payment.

Read next

• Invoice finance: Invoice finance advances most of the value of unpaid invoices to business customers, so you are not waiting months for cash. How it works and who it suits.
• Invoice finance vs line of credit: Invoice finance vs line of credit: which suits slow-paying customers, growing sales or uneven cash flow, with costs, setup and flexibility compared.
• Debtor days and how to cut them: Debtor days measure how long customers take to pay you. How to calculate them, why they matter for cash flow and practical ways to bring them down.
• Business funding for wholesale and distribution: Business funding for wholesalers and distributors: inventory, supplier deposits, retailer payment terms and growth, with invoice finance and lines of credit.

Words worth knowing

• Line of credit: an approved limit the business can draw, repay and draw again, usually paying interest only on the drawn balance.
• Invoice finance: funding that advances part of the value of unpaid invoices owed by business customers.
• Debtor days: the average number of days customers take to pay what they owe.
• Exit strategy: the planned way a short-term loan will be repaid, such as a sale, refinance or large receivable.

Five things to confirm with any lender

• What is the full cost of this finance in dollars over the whole term?
• Can I repay early, and will that cost extra?
• Is there a fee on the unused part of the limit?
• Who needs to sign or guarantee the loan?
• What exactly triggers a default under the contract?

Who else to talk to

Funding decisions often have tax, legal or family consequences. Talk to your accountant about how repayments, interest and any asset purchases will be treated, and to a lawyer if property, guarantees or a change of structure are involved. Getting advice before you sign is far cheaper than unwinding a decision afterwards, and it usually makes the application stronger too.

In a nutshell

• Funders review your debtor ledger and customers first
• Not every invoice is eligible
• Concentration limits can cap advances against a big client
• Setup is slower; ongoing advances are quick

How the process runs

One enquiry, one team, one clear answer. That is the whole approach. We read what you send, call you, ask for the documents that matter and lay out the options in plain English with the total cost attached. Your details are not shopped around, and your credit file is only checked if you choose to accept an offer. If the answer is no, you will hear it quickly and with a reason, so you can plan your next move.

When borrowing helps, and when it does not

Not every cash problem is a funding problem. Sometimes the better fix is a conversation with a supplier, a payment plan with the ATO, chasing an overdue invoice or adjusting prices. Funding earns its place when it solves a timing gap or unlocks an opportunity worth more than its cost. We will tell you honestly which situation you are in.

Paperwork worth gathering

A little preparation makes the first conversation far more useful, and it means the person who calls you can talk about options rather than chasing basic details:

• Your ABN and the legal name of the business.
• Online banking access, so recent statements can be shared through a secure read-only link.
• A rough figure for monthly turnover and the amount you need.
• A list of current loans and repayments, including any ATO payment plan.
• If property is involved, the address and roughly what is owed on it.

Help us match you first time

Late surprises are what slow funding down. A second property owner nobody mentioned, turnover that is lower in the statements than on the form, an amount that doubles after the first call: each one sends the assessment back to the start. If you tell us the full story at the beginning, even the awkward parts, the file only has to be worked through once.

Put your funding on call

If funding could help, let us know the details. Enquiring runs no credit check, your information stays with one team, and a real person will talk you through what fits. Please answer each question honestly and precisely, particularly the amount, turnover and whether you own real estate, so we can match you properly from the start.