Invoice funding as one piece of the mix

If your customers are other businesses, you’ve probably felt the gap: you finish the work, send the invoice, and then wait three to seven weeks for the money while wages, suppliers and GST don’t wait at all. Invoice funding closes that gap by advancing cash against the invoice itself. It’s not the only way to fix slow-paying debtors, but in the right mix it’s a powerful piece.

How does invoice funding work?

The basic flow:

1. You do the work and issue an invoice to a business customer.
2. The funder advances an agreed portion of the invoice value, usually within days.
3. Your customer pays the invoice — to you or to the funder, depending on the arrangement.
4. The funder releases the balance, less its fees.

Some arrangements cover your whole debtor ledger; others let you pick individual invoices. Some are disclosed to your customers; others are confidential. The details vary by funder, so read the agreement carefully.

When does invoice funding beat other pieces?

Situation	Why invoice funding fits
Fast growth with B2B customers	Funding rises automatically as sales rise
A big contract with monthly progress claims	Each claim becomes cash sooner
Large, reliable customers who pay slowly	Their credit strength supports the funding
No property to offer as security	The invoices are the security
Seasonal spikes in invoicing	Draws grow and shrink with activity

It’s a weaker fit for businesses selling mostly to consumers, those with many small invoices, those with frequent disputes or credit notes, and those whose customers pay quickly anyway.

What does it cost, beyond the fees?

Invoice funding is priced in different ways — service fees, discount charges, minimum usage — and we don’t publish rates because every facility is priced on the business’s situation. The non-price costs are worth weighing too:

• Admin. You’ll need to upload invoices, keep your ledger tidy and report regularly.
• Customer visibility. In disclosed arrangements, customers pay the funder, which some owners don’t like.
• Concentration limits. Funders may cap how much they’ll advance against a single customer.
• Exit terms. Some facilities have minimum terms or notice periods.

How does invoice funding sit with other security?

This is where mixing matters. Many business loans are secured by a general security agreement over all present and after-acquired property — which includes your debtors. An invoice funder will want first claim over the invoices it funds. Both lenders will search the PPSR, which records financing statements, and the Companies Office notes that registration gives priority over unregistered creditors and over those who register later.

If you already have a lender with a general security interest, you’ll usually need their consent or a priority arrangement before invoice funding can start. Our guide on who ranks first when you mix funding walks through it.

Illustrative example: a Wellington labour-hire business

Illustrative only; describes no real business.

A labour-hire business in Wellington pays its workers weekly but invoices clients monthly on 20th-of-the-month terms. As it grows, the gap between paying wages and getting paid reaches about $180,000. An invoice funding facility advancing most of each invoice when issued cuts the gap to a fraction of that. The business keeps a small line of credit for the remainder and for GST dates.

The labour-hire firm didn’t need a large loan — it needed its invoices to turn into cash faster. If your business has a similar shape and you’d like to talk through the options, start a short enquiry.

Should you fix collections first?

Yes, always. Before funding invoices, make sure you’re doing the free things: invoicing the day work is done, stating clear due dates, following up promptly. business.govt.nz suggests an email reminder two business days after the due date and a phone call if there’s no response after a week. Shortening your debtor days by even a week reduces how much funding you need. The guide on freeing up cash before borrowing covers the full playbook.

Where does invoice funding sit in a remix?

Usually after deposits and supplier terms, and before a term loan. For worked examples, see the big contract remix and the hiring remix. For businesses whose gap is about timing rather than invoices — seasonal trade, for example — a line of credit may suit better.

What makes a business a good fit for invoice funding?

Funders typically look for:

• Business customers — invoices to companies, government agencies or other organisations, not individuals.
• A spread of customers, so one late payer doesn’t sink the facility.
• Clean invoicing — clear descriptions, correct amounts, few credit notes or disputes.
• Work that’s complete when invoiced, rather than invoices raised in advance of delivery.
• A steady volume of invoicing, so the facility is used regularly.

Construction, labour hire, transport, wholesale, manufacturing and professional services often fit well. Retail and hospitality, where customers pay on the spot, don’t need it. If only one or two large invoices are the problem, selective or single-invoice funding may be enough, rather than a whole-ledger facility.

Want help deciding if invoice funding fits?

Tell us how you invoice, who your customers are and how long they take to pay. Start your enquiry and a real person will call you to talk through whether invoice funding, a line of credit or another piece suits your mix. There’s no credit check to start, and your enquiry isn’t shopped around a crowd of lenders. Please give accurate figures for your debtors on the form — it’s the fastest way to the right answer.