Working capital product

Money you have already earned , released early.

Invoice finance funds the gap between issuing an invoice and being paid for it. It is not a loan against the future. It is an advance against work already done and already billed.

Last reviewed 8 September 2026

Indicative interest cost

Weekly

Disclaimer

$162/week

$700 /month $8,400 a year while drawn

Facility limit $120,000

$5,000 $500,000

Average drawn balance $60,000

Nothing drawn Fully drawn

Indicative rate 14.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

The short version

Five lines before the detail.

It advances against invoices already issued. Work done, goods delivered, invoice raised. That is the asset being funded, which is why it is available to businesses a term lender would decline.
The advance is partial. A proportion of the invoice is released up front, commonly between 70% and 90%, and the rest comes when the customer pays, less the fees.
There are two fees, not one. A discount fee that behaves like interest on the drawn amount, and a service fee on the value of invoices put through. Quoting one and not the other understates the cost.
The limit grows as the business does. Because the facility sizes off the ledger, a business that invoices more can draw more, which is the opposite of how a fixed term limit behaves.
Indicative only. Every figure here is illustrative. Actual advance rates, fees and terms come from the funder after assessment.

The mechanism

What actually happens, invoice by invoice.

The business invoices its customer as it always has. A copy goes to the funder, which checks the invoice is for work genuinely completed and that the customer is one it will fund, and advances a proportion of the value. That money is in the account inside a day or two rather than at the end of the customer’s payment terms.

The invoice is then collected in the ordinary way. Under a confidential arrangement the business does its own collections and the customer sees nothing different. When payment lands, the funder takes the advance it made plus its fees, and releases the remainder.

Nothing about the underlying trade changes. The customer gets the same terms, the same invoice and the same relationship, and the business has the cash three to six weeks earlier than it otherwise would. What has changed is that a receivable, which is an asset the balance sheet already recognised, has become spendable.

Day 0

Invoice issued

Day 1 to 2

Advance released

Day 30 to 60

Customer pays

On payment

Balance, less fees

Worked example

A $40,000 invoice on 45-day terms.

A subcontractor completes a stage of work and invoices $40,000 on 45-day terms. The funder advances 85%, which is $34,000, within two working days. The remaining $6,000 sits with the funder until the customer pays.

The customer pays on day 48. The funder takes its $34,000 advance back, along with a discount fee calculated on the advance for the 48 days it was outstanding and a service fee calculated on the invoice value. The balance goes to the business.

On indicative pricing of 1.2% per 30 days on the advance and 0.4% of invoice value as a service fee, the total cost of that transaction is in the order of $815, and the business had $34,000 to work with for seven weeks it would otherwise have spent waiting. Whether that trade is worth making depends entirely on what the $34,000 did.

Illustrative figures

Invoice value: $40,000
Advance at 85%: $34,000
Days outstanding: 48
Indicative discount fee: ~$653
Indicative service fee: ~$160
Indicative total cost: ~$815

Illustrative on stated assumptions and rounded. Not a quote or offer of credit.

The pricing

Two fees, and what each one is charged on.

Indicative structures rather than any funder’s published rates. The point is what each fee is calculated on, because that is what makes two quotes comparable.

Fee	Charged on	Behaves like	Moves with
Discount fee	The amount advanced	Interest	How long the invoice takes to pay
Service fee	The face value of invoices funded	A transaction charge	How much is put through
Facility or line fee	The agreed limit	A standing charge	Nothing, it is fixed
Set-up fee	The facility, once	An establishment cost	Nothing
Disbursements	Searches and audits	A pass-through	How often reviews happen

Indicative fee structures. Any particular facility is priced by its funder after assessment.

The comparison trap

A discount rate quoted per 30 days is not an annual rate.

A facility quoted at 1.2% looks cheap beside a term loan quoted at 14%. The two numbers are measuring different periods, and converting the first to an annual equivalent puts it in a different place entirely. Add the service fee, which is charged on face value rather than on the advance, and the gap moves again. Asking a funder for the total cost on a stated volume over twelve months, in dollars, is the question that makes two offers comparable, and any funder can answer it.

Against the alternatives

Where invoice finance sits among the options.

All four fund a gap. They differ on what they are secured by, how fast they can be arranged and how the cost behaves as the business grows.

Feature	Invoice finance	Term loan	Overdraft
Secured against	The receivables ledger	The business, sometimes assets	The business, sometimes assets
Limit grows with turnover	Yes, automatically	No	Only on review
Available with a short trading history	Frequently	Less often	Less often
Cost basis	Per invoice and per day drawn	Fixed schedule	Per day drawn
Customer contact	None under a confidential facility	None	None
Suits a business whose problem is	Slow-paying customers	A one-off purchase	Small timing wobbles

The distinguishing feature is the second row. A facility that sizes off the ledger grows as the business wins work, which is exactly the point at which a fixed limit becomes the constraint.

Who it suits

Four business shapes where it works.

The common thread is a business selling to other businesses on credit terms, with a ledger of real invoices behind it.

Growing faster than it collects

Winning more work consumes cash before it produces it. A facility that scales with the ledger removes the constraint that arrives precisely when things are going well.

A few large, slow customers

Where the customers are large and creditworthy but pay on their own schedule, the receivable is strong and the wait is the problem. That is the case the product was designed for.

Labour-heavy, asset-light

A business whose main cost is wages has to pay before it bills, and has little to offer a secured lender. The ledger is the asset it does have.

Long project cycles

Staged work billed on completion of milestones leaves long gaps between outlay and receipt. Funding against each certified stage closes them.

The trade

What it gives and what it costs.

What it gives

Cash released against work already done rather than against a forecast
A limit that grows with the ledger instead of needing a review to move
Access for businesses with a thin balance sheet but strong customers
Speed, with an advance commonly available within a day or two of invoicing
No new asset encumbered where the facility is secured on receivables alone

What it costs

A cost per invoice that is meaningfully higher than a secured term facility
Two fees that have to be added together before any comparison means anything
A general security agreement over the business in most cases
Exposure to customer concentration, since a funder will limit how much of one debtor it funds
Ongoing administration, since invoices and payments have to be reported to the funder

The process

What setting a facility up involves.

Generalised rather than specific to any funder. The sequence is broadly consistent even where the detail is not.

01
Ordinarily quick where the report is current
Ledger review
The funder looks at who the business invoices, how much each customer owes, how old the debt is and how reliably it pays. The aged receivables report is the single most informative document in the file.
Documents commonly required
- Aged receivables report
- A sample of invoices
- Customer list
02
Business assessment
Entity details, bank statements and existing commitments, as with any facility. The weighting differs from a term application because the ledger carries more of the decision, and it is still an assessment of the business.
Documents commonly required
- Entity and director details
- Bank statements
- Financial statements where held
03
Terms and security
The advance rate, the fees, any concentration limits and the security position are set out. A general security agreement is common, and a registration on the Personal Property Securities Register follows.
Documents commonly required
- Facility agreement
- Security documents
04
Onboarding and first draw
Invoices are loaded, the notification arrangement is confirmed, and the first advance is released. From there the facility runs invoice by invoice rather than as a single event.

No timings are published here. They vary by funder, by the state of the ledger and by how complete the file is, and a page naming a number would be describing a promise nobody made.

When it goes wrong

Three situations worth understanding in advance.

General descriptions. What happens in any particular case depends on the facility agreement.

A funded invoice is not paid

Most facilities are with recourse, which means an invoice that goes unpaid past an agreed period is recharged to the business rather than absorbed by the funder. The advance has to be repaid or offset against other invoices.

What happens:The cash arrived early and then has to be found again, which is the risk that makes customer quality matter.

A customer disputes the work

A disputed invoice is ordinarily not fundable, and one already funded can be pulled back. Funders take this seriously because a dispute means the receivable may not exist in the form the invoice describes.

What happens:Funding is withdrawn on that invoice at the point the business is least able to absorb it.

Concentration in one debtor

Where a single customer represents a large share of the ledger, funders cap how much of it they will fund. A business with one dominant customer can find its usable limit far below its headline one.

What happens:The facility is smaller in practice than the agreement suggests, which is worth establishing before relying on it.

The pattern behind all three is that the funder is buying the quality of the receivable rather than the enthusiasm of the business. Clean invoicing, documented delivery and good customer records are what keep a facility working.

The honest limit

What invoice finance does not fix.

It funds a timing problem. Where a business is profitable and simply waiting, bringing the cash forward is a genuine solution and the fee is the price of not waiting. Where a business is not profitable, invoice finance brings forward money that was going to be insufficient anyway, and adds a cost to it.

That distinction is worth being blunt about, because the speed and accessibility of the product make it easy to reach for in the second situation. The test is whether the gap being funded is between earning and being paid, or between earning and spending. Only the first is a timing problem.

It also does nothing about the underlying payment behaviour. A business whose customers pay at 60 days on 30-day terms still has customers who pay at 60 days, and it is now paying to bridge that every month. Alongside a facility, the ordinary work of tightening terms, invoicing promptly and following up early is what reduces how much of the facility is needed.

The cost of being drawn

What a drawn balance costs to carry.

A receivables facility charges on what is drawn rather than on the limit, so this shows the interest cost of an average drawn balance rather than a repayment. The service fee sits on top of it. Indicative only, and not a quote or offer of credit.

Indicative interest cost

Weekly

Disclaimer

$162/week

$700 /month $8,400 a year while drawn

Facility limit $120,000

$5,000 $500,000

Average drawn balance $60,000

Nothing drawn Fully drawn

Indicative rate 14.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

References

Sources

Personal Property Securities Register
Backs the description of the security registration a receivables facility ordinarily involves.
Companies Office
The register used to confirm the entities involved in a facility.
Commerce Commission
The regulator whose guidance covers lender conduct and fee disclosure.
Inland Revenue, GST
Referenced for the point that GST on an invoice is accounted for under the business’s own basis rather than by the funder.
Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.

FAQ

Invoice finance in New Zealand, questions answered

What is invoice finance?

A facility that advances a proportion of an unpaid invoice shortly after it is issued, with the balance released when the customer pays, less the funder’s fees. It funds the gap between doing the work and being paid for it.

How much of an invoice is advanced?

Commonly between 70% and 90% of the value, depending on the funder, the customer and the sector. The remainder is held back and released on payment, which is what protects the funder against credit notes and short payments.

Do customers know about it?

Under a confidential arrangement, ordinarily not. The business continues to invoice and collect in its own name and the customer sees nothing different. A disclosed arrangement is a different product, and factoring is where that sits.

What does it cost?

Two fees rather than one. A discount fee charged on the amount advanced for as long as it is outstanding, and a service fee charged on the face value of invoices funded. A quote naming only the first understates the cost, sometimes considerably.

How does the cost compare with a term loan?

Ordinarily higher per dollar, because the funder is taking on the collection risk of a ledger rather than a single scheduled repayment. What it buys is availability and a limit that grows, which a term facility does not offer.

What happens if a customer does not pay?

Most New Zealand facilities are with recourse, so an invoice unpaid past an agreed period is recharged to the business. Non-recourse arrangements exist, cost more, and shift some of that risk to the funder subject to their own conditions.

Does every invoice have to go through the facility?

It depends on the arrangement. Selective facilities fund chosen invoices, whole-of-ledger facilities require all of them. The selective version is more flexible and ordinarily prices higher, because the funder sees less of the picture.

Is security required?

Ordinarily a general security agreement over the business, registered on the Personal Property Securities Register. Where an existing lender already holds a general security, the two positions have to be resolved before a facility can start.

Can a business with one big customer use it?

Sometimes, with a lower usable limit. Funders cap how much of a single debtor they will fund, so a concentrated ledger produces a facility smaller than its headline. Establishing that cap early avoids planning around money that will not be available.

How quickly can funding start?

It varies by funder and by how current the aged receivables report is, and no timing is published here. What is consistent is that once a facility is running, individual advances are fast, because the assessment work is already done.

Does it affect the GST position?

The GST on an invoice is accounted for by the business under its own accounting basis rather than by the funder, and how a facility interacts with that is a matter for the accountant. The funder is advancing against the invoice rather than buying the supply.

Is this page financial advice?

No. It describes how a product works in general terms. This site is not a lender, a broker or a registered financial adviser, and whether a facility suits a particular business depends on facts a website cannot see.