Invoice Financing: A Simple Way to Ease Cashflow Strain for Small Business
A quick guide for BAVBC members
What is invoice financing?
Invoice financing is a simple way for small businesses to get paid sooner.
Instead of waiting 30, 45 or 60 days for a customer to pay an invoice, a finance provider gives you most of the money upfront (usually 80–90%). When the customer pays, you receive the rest minus a small fee.
It’s basically turning unpaid invoices into cash you can use today.
Why it helps small businesses
Most small businesses face the same problem:
Bills and wages arrive weekly — customers pay monthly.
Invoice financing smooths this out by giving you access to money you’ve already earned.
It can help you:
- pay wages on time
- buy materials without stress
- cover BAS and tax instalments
- avoid dipping into personal savings
- reduce pressure on the family budget
- take on more work without worrying about cashflow gaps
It’s not “taking on debt” — it’s unlocking your own money earlier.
How it compares to credit cards and overdrafts
Credit Card
- Easy to use
- Very high interest (18–22%)
- Can quickly become personal debt
- Not designed for business cashflow
Bank Overdraft
- Useful but hard to get
- Often requires your home as security
- Interest + fees can add up
- Bank can reduce or cancel it anytime
Invoice Financing
- No need to borrow against your house
- Quick approval
- You only pay for what you use
- Costs usually lower than credit cards
- Grows automatically as your business grows
- Based on your invoices — not your personal assets
Think of it like this:
Credit cards and overdrafts borrow money you don’t have. Invoice financing gives you early access to money you’ve already earned.
A simple example
You issue a $10,000 invoice. Your customer pays in 45 days.
With invoice financing:
- You receive $8,500–$9,000 today
- You use it to pay wages, buy materials, or take on new jobs
- When the customer pays, you receive the balance minus a small fee (e.g., $200–$300)
Cost: roughly 2–3% of the invoice. Benefit: staying afloat, staying sane, and staying in business.
Where can businesses find invoice‑financing options?
If you want to explore invoice financing, here are three easy places to start:
1. Your existing bank
Most major banks offer invoice or debtor‑finance facilities. This can be the simplest path because they already know your business.
2. Specialist invoice‑finance providers
There are established Australian companies that focus solely on invoice financing for small business. A quick search for “invoice financing Australia” or “debtor finance small business” will show a range of reputable options.
3. Your accountant or bookkeeper
Accountants often have trusted providers and can help you compare costs and suitability. A short conversation can save you time and money.
A quick reminder
Invoice financing is not a loan — it’s early access to your own money. But like any financial product, compare:
- fees
- contract terms
- speed of funding
- fit for your business model
A little homework goes a long way.