Invoice finance: Unlock cash flow without waiting
For many businesses, making sales is only half the battle. Waiting 30, 60, or even 90 days for customers to pay can create significant pressure on cash flow. Invoice finance provides a practical solution by allowing businesses to access the value of their unpaid invoices before customers settle them.
What is invoice finance?
Invoice finance is a flexible funding solution that enables businesses to unlock working capital tied up in outstanding invoices. Rather than waiting weeks or months for payment, a finance provider advances a large percentage of the invoice value—typically between 80% and 90%—within 24 to 48 hours. Once your customer pays the invoice, you receive the remaining balance, less the agreed fees.
For growing businesses, invoice finance can improve cash flow, reduce financial stress, and provide the working capital needed to invest in growth opportunities.
How does invoice finance work?
The process of invoice finance is straightforward. First, you issue an invoice to your customer for goods or services. Instead of waiting for their payment, you sell that invoice to an invoice finance provider. They advance you a significant portion of the invoice value immediately. Once your customer pays the full invoice amount to the finance provider, you receive the remaining balance, minus the agreed fees for the service.
Types of invoice finance
Invoice factoring
With invoice factoring, the finance provider manages your sales ledger and collects payment directly from your customers. This can reduce administrative workload while providing consistent access to cash flow. Factoring is often suitable for smaller businesses that want both funding and debtor management support.
Invoice discounting
Invoice discounting provides funding against unpaid invoices while allowing your business to continue managing customer relationships and collecting payments. Many facilities operate confidentially, meaning your customers may not know finance has been arranged. Invoice discounting is commonly used by established businesses with strong internal credit control systems.
There are several forms of invoice finance available, allowing businesses to choose the solution that best suits their needs.
Selective invoice finance
Rather than financing every invoice, selective invoice finance allows businesses to choose individual invoices to fund when required. This offers flexibility and can be particularly useful for seasonal businesses or companies with occasional cash flow requirements.
Who benefits from invoice finance in New Zealand?
Invoice finance is particularly beneficial for New Zealand businesses experiencing growth, as it provides the capital needed to seize new opportunities without relying on traditional loans. It's also ideal for businesses with fluctuating cash flow, as it smooths out peaks and troughs by providing consistent access to funds based on their sales. Whether you're expanding rapidly or navigating seasonal demands, invoice finance can provide stability and support.
What are the costs of invoice finance?
The cost of invoice finance varies depending on factors such as your annual turnover, the number of invoices, customer payment history, industry sector, funding requirements, and the type of facility you choose. Understanding these elements is key to securing competitive pricing.
Most facilities include two primary charges: a service fee, which covers the administration and management of the facility, and a finance fee, which is the interest charged on the funds advanced until invoices are paid.
Is Invoice Finance Right for Your Business?
Invoice finance is suitable for many businesses that sell goods or services to other businesses on credit terms.
Industries commonly using invoice finance include:
Construction
Manufacturing
Transport and logistics
Wholesale distribution
Professional services
Recruitment
Engineering
Healthcare
Agriculture
Commercial trades
Businesses experiencing rapid growth, seasonal demand, or lengthy customer payment terms often benefit the most.
Common uses for invoice finance
Businesses utilise invoice finance for diverse purposes, including meeting payroll obligations, purchasing stock and inventory, funding business expansion, covering operating expenses, managing seasonal fluctuations, improving working capital, reducing reliance on overdrafts, and taking on larger customer contracts. Since funding is directly linked to your sales, invoice finance offers a flexible capital source that expands with your business.
Why choose Canterbury Business Finance for your invoice finance needs?
At Canterbury Business Finance, we understand that every business has unique requirements. What sets us apart is our commitment to finding the perfect solution for you. We don't just offer one product; we compare all the leading invoice finance providers in New Zealand to match you with the one that best suits your specific needs, terms, and growth objectives. Let us do the hard work so you can focus on running your business.