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The Best Invoice Finance Options - The Definitive New Zealand Guide to Invoice Factoring & Invoice Discounting

Access 80-90% of unpaid invoices within 24 hours. Compare New Zealand's top invoice financing providers, understand true costs, and discover if it's right for your business.
Updated 13 October 2025
Summary:
  • With the cost of borrowing at recent highs driven by the Reserve Bank of New Zealand's decision to raise the official cash rate (OCR), many New Zealand businesses are taking a serious look at their cash flow to figure out whether they can continue to meet operating costs such as overhead and payroll.
  • While business loans are popular, one of the less-common options available to New Zealand businesses is invoice financing services, which can act as a short-term liquidity option for companies with unpaid invoices.
  • We've published this guide to help business owners understand invoice financing services, and explain invoice factoring and invoice discounting.
  • Most providers have minimum invoice values of $1,000 to $5,000. Some may aggregate smaller invoices to meet minimums. Providers typically verify invoices by checking your accounting records, confirming delivery of goods/services, credit checking your customers and/or contacting customers directly (for factoring)
  • What terms you'll be offered will vary business by business. It can be confusing to compare the different fees, rates, and trade-offs compared to other forms of financing (such as small business loans, lines of credit, personal loans and other forms of business loans).
  • Invoice financing can be a useful tool for businesses of all sizes trading throughout New Zealand that need to improve cash flow and access working capital. However, while it can be a useful tool for companies with slow payment terms or that don't have access to traditional lending sources, it can also be more expensive than other forms of financing and usually involves fees and discounts which need to be factored in to your margins.
  • Our guide has been published to help businesses understand key terms and definitions, evaluating the advantages and disadvantages, and considering the potential risks and challenges, businesses can make informed decisions about whether invoice financing and invoice factoring is the right financial solution for their needs.
  • We also shortlist of the top invoice financing providers in New Zealand and list top facts you need to know and the most frequently asked questions.

Our guide covers:
Warning: Please be wary of providers demanding upfront fees before funding, requiring you to factor all invoices (not selective), offering rates significantly below market (under 1.50% monthly), having no physical New Zealand presence, or pressuring you to sign immediately without time to review contracts. 

Timing considerations: We believe the best times to start include securing a major contract with extended payment terms or planned seasonal growth. The worst times include when you're already in financial distress, losing major customers, or during industry downturns when your customers' creditworthiness is declining.
Important: Minimum Turnover Requirements Apply - Most Providers Won't Tell You Upfront What They Are
Before spending time on applications, understand that most invoice financing providers have strict minimum turnover requirements that can immediately disqualify smaller businesses:
  • Entry-level providers (Prospa, Butn, FundTap): Typically require $100,000+ annual turnover
  • Mid-tier providers (ScotPac): Usually need $500,000+ annual turnover
  • Bank-based options (BNZ CashFlow Plus): Generally require $1 million+ annual turnover​
Know This: Certain Industries Face Challenges Getting Invoice Financing

Difficult to finance industries (generally) include:
  • Construction with retention clauses (often 10-20% of invoice value held back)
  • Creative agencies and marketing firms (subjective deliverables)
  • Recruitment agencies (high risk of placement failures)
  • IT services with milestone payments
  • Businesses selling to the government (very long payment terms)
  • Any business with concentration risk (over 30% revenue from one customer)

Industries that (generally) get the best terms:
  • Manufacturing with clear delivery points
  • Wholesale/distribution with established customers
  • Transport and logistics with regular contracts
  • Professional services with corporate clients
  • Medical supplies to established practices

What is Invoice Financing? How Does the Invoice Financing Process Work?

  • Invoice finance is a financial tool that allows businesses to borrow against the money due from their customers.
  • Invoice finance allows businesses to access funds from unpaid invoices almost immediately rather than waiting for customers to pay in full. This functionality can help keep the business running smoothly and maintain cash flow without waiting for customer payments.
  • Invoice financing allows businesses to bridge the gap between the time they issue an invoice and the time they receive payment, helping them to maintain a positive cash flow and grow their business, maintain working capital and pay time-sensitive expenses such as employee salaries and supplier payments. With big companies settings invoice payment terms as long as 60 or even 120 days, cash can otherwise take a long time to appear in a business bank account.
  • Invoice financing is a flexible and convenient way for businesses to access working capital, as it doesn't require traditional forms of collateral such as property or equipment. As a result, invoice financing is a popular option for businesses in various industries, including manufacturing, wholesale, and service-based businesses.

There are two main types of invoice financing: invoice factoring and invoice discounting. Both types of invoice financing allow businesses to sell their unpaid invoices to a financing company in exchange for immediate payment. We break down the key differences between invoice factoring and invoice discounting below. 

A Common Question MoneyHub Readers Ask Us: "I’m concerned about cash flow. Should I use invoice financing or take out a small business loan?"
The answer depends on several factors you'll need to consider.
  • First, invoice financing is a fast financial solution that allows businesses to access funds secured by unpaid invoices almost immediately. This increased cash flow speed can be useful for businesses experiencing cash flow problems and needing a quick influx of working capital.
  • However, invoice financing does have some drawbacks, including the possibility of not receiving the full value of the invoices and the risk of becoming overly reliant on the financing.
  • Small business loans are another option for businesses needing to manage their cash flow. In the past, small business loans may have taken weeks to process, which made them less suitable for businesses with urgent cash flow needs, however online lenders are changing this and speeding up applications to help manage the ups and downs of cash flow. Overall, small business loans can be processed quickly, making them a viable alternative to invoice financing for businesses needing fast financing.
  • For a further breakdown of small business loans, check out our comprehensive guide and comparison.
Understanding What Invoice Finance Can Cost
Our examples indicate typical costs, but the fees will vary based on the lender and the business

Example 1: Small Business Scenario
  • Invoice value: $10,000
  • Payment terms: 30 days
  • Provider advance rate: 80% ($8,000 upfront)
  • Discount rate: 3% of total invoice
  • Setup fee: $500 (one-time)
  • Monthly management fee: $100

Actual cost:
  • Discount fee: $300
  • Monthly management: $100
  • Total cost for this invoice: $400
  • Effective interest rate: 4% for 30 days = 48% annualised
  • Plus $500 setup if first time

Example 2: Growing Business Scenario
  • Monthly invoices: $50,000
  • Average payment terms: 45 days
  • Provider advance rate: 85% ($42,500 upfront)
  • Discount rate: 2.5% for first 30 days, 0.5% per week after
  • Credit check fees: $50 per new customer
  • Same-day funding premium: 0.25%

Actual cost:
  • Discount fees (45 days): $1,625
  • Credit checks (2 new customers): $100
  • Same-day funding on urgent invoices: $125
  • Total monthly cost: $1,850 = 3.7% of invoice value
  • Annual cost if used continuously: $22,200

Understanding Invoice Factoring vs Invoice Discounting

What is invoice factoring? How does the invoice factoring process work?

  • Invoice factoring is a financial solution allowing businesses to access funds secured by unpaid invoices.
  • To use invoice factoring, a business sells its unpaid invoices to a financing company (known as the factor) at a discount (usually 2% to 5% of the total invoice value). The factor then advances the business a percentage of the invoice value, typically around 80%.
  • When the customer's invoice is due, they pay the factor rather than the business. The factor then sends the remaining balance to the business, less their discount fees.
  • Invoice factoring allows businesses to access funds from their unpaid invoices almost immediately rather than waiting for customers to pay.

What is invoice discounting? How does the invoice discounting process work?

  • Invoice discounting is a financial solution allowing businesses to access funds secured by unpaid invoices.
  • Unlike invoice factoring, where the business sells its invoices to the financing company, invoice discounting allows the business to retain ownership of the invoices.
  • To use invoice discounting, a business sells its invoices to a financing company, which determines the percentage of the invoice value to lend.
  • The financing company then advances funds to the business as a line of credit or a lump sum.
  • When a customer's invoice is due, the customer pays the business rather than the financing company. The business then pays the financing company the amount advanced or used from the line of credit, plus any fees or interest.
  • Invoice discounting allows businesses to access funds from their unpaid invoices almost immediately while maintaining control over the collection process.

Why do businesses take out invoice financing?

  • Avoids debt: Invoice financing can be an effective way for businesses experiencing cash flow problems to access the funds they need without taking on more debt. Unfortunately, many businesses have cash flow issues, and a significant amount of invoices are paid late, making it difficult for businesses to pay bills, hire staff, buy inventory, or expand.
  • Fast money: In the past, businesses facing tight cash flow may have taken out a loan or struggled to get by without the necessary funds. However, invoice financing can be a faster and more flexible option. With invoice financing, finance companies will advance businesses a percentage of the value of their unpaid invoices, typically 75 to 90 cents on the dollar. This advance allows the business to access funds almost immediately, rather than waiting for the customer to pay.
  • Low fees: While fees are associated with invoice financing, they can be useful for businesses to overcome short-term cash flow issues. This can make it a cheaper solution than a business loan or line of credit.

Invoice Finance - Pros & Cons

Pros
There are several advantages to invoice financing, including the following:
  • Access to working capital: Invoice financing provides a quick source of working capital that can be used to meet short-term financial obligations or to fund business growth.
  • Access to funds without extending long-term debt: Invoice financing allows businesses to access the funds they're owed almost immediately, rather than taking on long-term debt such as a traditional loan. This access makes it a good shorter-term solution.
  • Flexibility in choosing the amount of funding needed: Online invoice financing companies allow businesses to choose how much credit they take out rather than requiring them to sell their entire accounts receivable. This flexibility allows businesses to stay in control of their credit needs.
  • Easy application process: Businesses can apply for invoice financing online through accounting software (such as Xero) without paperwork. Some providers even offer mobile apps that allow businesses to manage the entire invoice financing process from their mobile devices.
  • Streamlined bookkeeping: Some invoice financing providers automatically update accounting software, making it easier to track part payments and fees against each financed invoice.
  • Faster money when the company is experiencing a cash flow crunch: Invoice financing can provide a quick source of working capital to help a company meet its short-term financial obligations.
  • Faster money when the company's customers have slow payment terms: Invoice financing allows a company to receive payment for its goods or services much sooner than if it had to wait for its customers to pay the invoices.
  • Minimal personal risk (e.g. personal guarantees, collateral and credit checks): When the company doesn’t have access to traditional lending sources, invoice financing doesn’t usually require collateral or a credit check, making it an attractive option for companies that do not qualify for traditional loans.

Cons
There are also several disadvantages to invoice financing, including:
  • Cost: Invoice financing can be more expensive than other forms of financing, as it involves fees and discounts. This cost means businesses won’t receive the full value of their invoices when using invoice financing, as the financing company takes a fee for its services.
  • Loss of control: When a company sells its unpaid invoices to a financing company, it loses control over the collection process.
  • Impact on customer relationships: The actions of the financing company may damage the business's relationship with its customers if the customers see the financing company as a debt collector.
  • Dependence on the financing company: A company that relies on invoice financing may depend on the financing company for access to working capital. This dependence can be a disadvantage if the company cannot secure financing from the financing company for any reason.
  • Lack of long-term financing: Invoice financing is typically a short-term financing solution, so it may not be suitable for companies that need long-term financing.
  • Credit risk: There is a risk that the company's customers may default on their invoices, which could result in losses for the company and the factoring company.
  • Confidentiality: Some companies may be concerned about the confidentiality of their financial information, as it is shared with the factoring company.
  • Legal issues: Legal issues may arise when a company sells its unpaid invoices to a third party, such as disputes over ownership or the transfer of liabilities.
  • Administrative burden: Invoice factoring may involve additional administrative tasks, such as tracking invoices and communicating with the factoring company.
  • Age of invoices: Financing companies may not be willing to buy very old invoices.

How Do I Choose the Best Invoice Financing Provider?

When choosing an invoice financing provider, asking questions and being aware of the product's details are important. Some tips and factors to consider when picking an invoice financing provider include the following:
  • Understand the fees: Look for providers that have transparent, easy-to-understand fee structures. Conversely, be wary of providers that use complex fee structures to hide high costs. Remember – the invoices are the lifeblood of your business, so you want to know clearly how much you’ll be paying for any financing service.
  • Know the finance model: Some providers offer a combination of invoice factoring, lines of credit, and payment plans. It's important to understand the specific type of finance being offered and how it affects the amount of money that can be advanced and when it needs to be repaid.
  • Consider the consequences of non-payment: Find out what will happen if the debtor does not pay the invoice. For example, will the client need to pay back the money, or will the provider assume the risk?
  • Selectivity: Determine if the financing company needs to control all invoices or if the client is allowed to choose which ones to finance.
  • Relationship management: Consider who will manage the relationship with the debtor. The invoice financing company may take responsibility for chasing unpaid invoices, which could impact the client's control over the relationship with their customer. It's also important to determine if the financiers will require the setup of a joint account with the client for receiving invoice payments from the debtor.
  • Compatibility with your accounting system: Consider whether the factoring company's systems are compatible with your accounting system to make the process as seamless as possible.
  • Reputation: Research the reputation of the factoring company and read reviews from other companies that have used their services.
  • Flexibility: Look for a factoring company willing to customise its services to meet the specific needs of your business.
  • Customer service: Consider the customer service the factoring company offers, including their responsiveness and willingness to answer your questions.
  • Industry expertise: Look for a factoring company that has experience working with companies in your industry and understands the specific challenges and opportunities you face.
  • Financial stability: Consider the financial stability of the factoring company, as you will be relying on them for payment.
  • Turnaround time: Consider the turnaround time for payment from the factoring company and how it compares to other options.

Invoice Finance Lenders

Active players in the market include:

Prospa
  • Maximum funding: Up to $500,000
  • Advance rate: Up to 85% of invoice value
  • Setup time: 24 hours
  • Best for: Small to medium businesses
  • Key advantage: Flexible repayment options

FundTap
  • Maximum funding: Up to $200,000
  • Advance rate: Up to 90% of invoice value
  • Setup time: 24 hours
  • Best for: Fast-growing businesses needing flexible terms
  • Key advantage: No long-term contracts, pay-as-you-go model. Private facility so your clients don’t know it exists, funds B2B and B2C invoices as well as overseas debtors for businesses and sole traders

ScotPac Business Finance
  • Maximum funding: No set limit
  • Advance rate: Up to 90% of invoice value
  • Setup time: 24-48 hours
  • Best for: Established SMEs with $500k+ annual revenue
  • Key advantage: Over 30 years of experience, specialist industry knowledge

Butn
  • Maximum funding: Up to $1 million
  • Advance rate: Up to 90% of invoice value
  • Setup time: 24 hours
  • Best for: SMEs wanting quick digital solutions
  • Key advantage: No minimum monthly fees​

What about banks?
  • Currently, out of the largest banks in New Zealand, only the BNZ offer a bespoke invoice financing service to New Zealand businesses.
  • ASB, ANZ, Kiwibank and Westpac do not offer typical invoice financing.
  • However, ASB, ANZ and Westpac offer a variety of trade financing tools for exporters (which may include invoice financing).
  • We suggest contacting your bank for more details.

Must-Know Facts about Invoice Finance

​Invoice Financing is a useful tool, but it isn't always the best option

  • Invoice financing can be a valuable tool for businesses facing short-term cash flow issues, but it is not always the best option.
  • Our view is that businesses should not rely on invoice financing as a long-term solution to recurring cash flow issues.
  • Instead, it's important to address the underlying causes of the problems and develop strategies to prevent bad habits from forming.

The liability of "who's on the hook" varies between each invoice financing provider

  • When selecting an invoice financing provider, ask about the consequences if the customer fails to make the payment.
  • In some cases, the finance company may take a hit. In others, it may fall to you. Understanding who will take the loss if the customer doesn't pay is essential when negotiating with invoice financing providers. Negotiating who's liable for unpaid invoices could make the difference between profit and loss in the financial year.

Your business relationships and reputation can be affected by your choice of financing type

  • ​When choosing between invoice factoring and invoice discounting, consider how each option impacts your customer relationships. With factoring, your customers will know you're using a third-party finance company as they'll be instructed to pay the factor directly.
  • This visibility can sometimes affect how customers perceive your business's financial stability. Invoice discounting maintains confidentiality, allowing customers to continue paying you directly, thereby preserving the appearance of normal business operations.
  • For businesses in relationship-sensitive industries or those dealing with large corporate clients who may have concerns about supplier stability, this distinction can be crucial for maintaining long-term contracts and partnerships.​

The true cost of invoice financing extends beyond the advertised rate

  • While providers advertise rates of 1-3% per month, the actual cost of invoice financing often includes multiple hidden fees that can significantly impact your bottom line.
  • These may include application fees, setup costs, monthly management charges, credit check fees on your customers, same-day funding premiums, and termination penalties. Some providers also charge for unused facilities or require minimum monthly volumes.
  • When comparing providers, calculate the total annual cost, including all fees, not just the discount rate. A provider with a slightly higher rate but fewer additional charges may actually be cheaper than one advertising rock-bottom rates with extensive fee schedules.​

Invoice financing can create a dependency cycle that's difficult to break

  • Once businesses start using invoice financing regularly, it can become challenging to stop without experiencing disruptions to their cash flow.
  • This occurs because the business effectively brings forward future cash flows, creating a gap when it attempts to exit the arrangement. For example, if you consistently finance 30-day invoices, stopping means waiting an additional 30 days for cash to flow naturally again.
  • This dependency can make it expensive to switch providers or return to normal payment cycles.
  • Our view is somple - having an exit strategy before you start is essential for maintaining financial flexibility.

Alternatives to Invoice Financing

There are several alternatives to invoice financing, including:
  • Bank loans: Bank loans are a traditional source of working capital, but they typically require collateral and a credit check.
  • Merchant cash advances: A merchant cash advance is a short-term loan repaid through a percentage of the company's daily credit card sales.
  • Purchase order financing: Purchase order financing is a financial service that provides funding to a company to fulfil a customer's purchase order. The financing company pays the supplier directly, and the company repays the financing company once the goods have been sold to the customer.
  • Accounts receivable financing: Accounts receivable financing is a financial service that provides funding based on a company's accounts receivable value. The financing company advances a percentage of the value of the accounts receivable, and the company repays the advance plus a fee once the accounts receivable are collected.
  • Business overdrafts: A flexible credit facility attached to your business account that allows you to withdraw more than your account balance up to an agreed limit. Interest is only charged on the amount used, making it suitable for managing short-term cash flow gaps.
  • Business lines of credit: Similar to overdrafts but typically offering higher limits and better rates. You can draw funds as needed up to your credit limit and only pay interest on what you use, providing flexibility for varying cash flow needs.
  • Trade credit insurance: Rather than financing invoices, this protects your business against customer non-payment. While it doesn't provide immediate cash, it can make other forms of financing easier to obtain by reducing risk.
  • Supply chain financing: Your customers arrange early payment of your invoices through their bank at a discount. This can offer better rates than traditional invoice financing as it's based on your customer's credit rating rather than yours.
  • Asset-based lending: Uses your business assets (inventory, equipment, property) as security for a revolving credit facility. This can provide more funding than invoice financing alone and at potentially lower rates.

Frequently Asked Questions

Can I factor in all of my invoices?

It’s generally possible to factor most, if not all, of your invoices. However, some factoring companies may have minimum and maximum requirements for the volume and value of invoices that they will purchase. It's also important to consider the creditworthiness of your customers and the potential impact on your customer relationships.

Can I factor invoices that are already past due?

It may be possible to factor invoices that are already past due. Still, it will depend on the terms and conditions of the factoring agreement and the customer's creditworthiness. For example, factoring companies may require additional documentation or security for past-due invoices or charge higher fees and discounts.

Can I factor invoices that the customer is already disputing?

It may be possible to factor invoices that the customer is already disputing. Still, it'll depend on the terms and conditions of the factoring agreement and the customer's creditworthiness. Therefore, it's important to carefully review the dispute and consider the potential impact on your business before deciding to factor disputed invoices.

What is cash flow financing?

Cash flow financing is a financial solution that allows businesses to access funds secured by their expected cash flow. This type of financing is similar to invoice financing, but instead of selling invoices, the business receives a loan based on its expected cash flow. Cash flow financing is useful for businesses that rely on cash and need immediate funds to meet expenses they would not normally be able to afford.

​For example, a party supply store might have the opportunity to buy a bulk load of balloons at a discounted price, but it must pay cash immediately. If the store does not have enough cash, it could get a short-term cash flow loan to cover the balloon purchase and repay the loan when it comes in.

How quickly can I access funds through invoice financing?

Most providers offer funding within 24 to 48 hours of approval. Some digital platforms like Xero/Waddle can provide same-day funding once your account is set up and invoices are verified.

​What's the typical cost of invoice financing in New Zealand?

Costs typically range from 1.50% to 5% of the invoice value per month, depending on your business profile, invoice quality, and customer creditworthiness. Additional fees may include setup fees ($500-$2,000) and monthly management fees ($50-$200).

Can startups use invoice financing?

While possible, most providers prefer businesses with at least 6-12 months of trading history and annual revenue of $100,000+. Startups may face higher fees or stricter terms.

What happens if my customer doesn't pay the invoice?

This depends on whether you have recourse or non-recourse factoring. With recourse factoring (most common in NZ), you're responsible for buying back the invoice if your customer doesn't pay. Non-recourse factoring transfers the risk to the provider but costs more.

Can I choose which invoices to finance?

Yes, most modern providers offer selective invoice financing, allowing you to choose specific invoices rather than committing your entire ledger. This gives you more control and flexibility.

How does invoice financing affect my customer relationships?

With invoice discounting, your customers won't be aware that you're using financing. With factoring, the provider handles collections, which some customers may find off-putting. Choose based on your relationship sensitivity.

What industries work best with invoice financing?

Invoice financing works particularly well for:
  • Professional services (consulting, IT, marketing)
  • Manufacturing and wholesale
  • Transport and logistics
  • Construction (with progress payments)
  • Healthcare services

​Industries with long payment cycles or dealing with large corporates benefit most.

Can I use invoice financing if I already have a business loan in place?

Generally, yes, as invoice financing uses your receivables as security rather than physical assets. However, please review your existing loan agreements to verify if there are any restrictions on additional financing.

Can I exit an invoice financing arrangement early?

Most providers offer flexible terms without lock-in contracts. However, some may have minimum terms (3-6 months) or early exit fees. Always check the contract details.

Is invoice financing regulated in New Zealand?

Invoice financing isn't specifically regulated like banking, but providers must comply with the Fair Trading Act, the Consumer Guarantees Act, and the Credit Contracts and Consumer Finance Act, where applicable.
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