How Much Does Invoice Finance Cost in NZ?
Expect roughly 1% to 4% of the invoice value for every 30 days it stays unpaid, with some providers quoting up to 5% a month. On top of that sit setup fees of around $500 to $2,000 and monthly management fees of about $50 to $200. The headline rate is rarely the whole cost.
Typical NZ Invoice Finance Costs
There is no official New Zealand rate survey for invoice finance, and no Reserve Bank series that tracks it. The ranges below come from what NZ providers and comparison sites publish, so treat them as the market's own description of itself rather than independent data. Rates are quoted per borrower, so your own number depends heavily on who your customers are.
| Charge | Typical NZ range | What it is |
|---|---|---|
| Discount or service fee | 1% to 4% per 30 days outstanding | The main charge, applied to the invoice value for as long as it is unpaid |
| Upper end quotes | Up to about 5% per month | Where customer credit quality is weaker or invoices are small |
| Advance rate | Commonly around 80% | How much of the invoice you receive upfront. The rest follows when your customer pays |
| Setup or establishment fee | About $500 to $2,000 | One off, charged when the facility starts |
| Monthly management fee | About $50 to $200 | Charged whether or not you draw on the facility |
| Other charges | Varies | Monthly minimums, audit or due diligence fees, credit checks on your customers, same day funding premiums, early termination penalties |
Sources: FeeFunders on NZ invoice finance rates and costs, MoneyHub's invoice finance guide and ScotPac on what invoice finance is. Provider pages are marketing, and several are more than a year old, so confirm current pricing directly.
Worked Example on a $10,000 Invoice
An Auckland engineering supplier finances a single $10,000 invoice on 30 day terms, at an 80% advance and a 3% discount fee, with a $500 setup fee in the first month and a $100 monthly management fee.
| Item | Amount |
|---|---|
| Invoice value | $10,000 |
| Advanced to you upfront, at 80% | $8,000 |
| Discount fee at 3% for 30 days | $300 |
| Monthly management fee | $100 |
| Cost for the month, excluding setup | $400 |
| Setup fee, first month only | $500 |
| Balance released when your customer pays | $1,600 |
The number nobody puts on the page: $400 to borrow $8,000 for 30 days is about 5% for the month, which annualises to roughly 60%. On a facility used continuously that is the real comparison against an overdraft. It is not a reason to reject invoice finance, because an overdraft at 12% is no use if the bank will not extend one. It is a reason to be precise about what you are comparing.
If your customer pays late, the clock keeps running. A 3% monthly fee on an invoice that takes 75 days becomes about 7.5%. That is why your customers' payment behaviour matters more to your invoice finance bill than your own credit does.
What Moves the Rate You're Offered
- Your customers' credit quality, not yours. The financier is relying on your debtors to pay. A ledger of large, well rated accounts gets a far better rate than a long tail of small ones.
- How fast your customers actually pay. The fee is charged per 30 days outstanding, so your debtor days directly set your cost. Cutting them is the cheapest rate reduction available.
- Concentration. If one customer is 60% of your ledger, expect a worse rate or a cap, because one failure takes the facility with it.
- Invoice size and volume. Fixed charges hurt small invoices most. A $1,200 invoice carrying a share of a $100 monthly fee is expensive in percentage terms.
- Disputes and credit notes. A history of credit notes or contested invoices raises the price, because disputed invoices are hard to collect.
- Whether the facility has recourse. Without recourse costs more, because the financier is taking the bad debt risk rather than lending against it.
How to Compare Offers Without Being Misled
Ask every provider for the same thing: the total dollars you will pay on one representative invoice, at your actual average payment days, including every fee. Not the headline percentage. Then do it again assuming your customers pay 30 days later than usual, because that is the scenario the fee structure is built for.
How PaidTerms compares. PaidTerms is priced differently, so it is worth setting out plainly rather than converting it into an invoice finance rate. The merchant fee is 1.5% of the sale, charged once. There is no setup fee, no monthly facility fee, no advance rate holding back 20%, and no clock that keeps running if the customer is slow, because the customer's instalment schedule is fixed and PaidTerms collects it. You receive the full invoice amount within 12 hours. The customer pays the instalment fee for the term they choose, from 3.95% for three instalments. See pricing.
The honest limitation: this works at the point of sale, on new invoices. It does not release cash from invoices you issued two months ago. For that, invoice finance is the right product.
More: the Invoice Finance guide, invoice finance vs a trade credit account, invoice factoring in NZ compared with PaidTerms and the Cash Flow guide. This article is general information, not financial advice.
Frequently Asked Questions
How much does invoice finance cost in New Zealand?
Typically 1% to 4% of the invoice value for every 30 days it stays unpaid, with some providers quoting up to 5% a month. Add a setup fee of roughly $500 to $2,000 and a monthly management fee of about $50 to $200. On a $10,000 invoice at 3% for one month, that is around $400 including the monthly fee.
Is invoice finance expensive compared with an overdraft?
Yes, usually several times more in annualised terms. A fee of 3% a month works out far above a bank overdraft rate. The comparison only matters if a bank will actually give you the overdraft, which is often the reason businesses use invoice finance instead.
What percentage of the invoice do I receive?
Commonly around 80% upfront, with the balance paid when your customer settles, less the fee. The advance rate varies by provider and by how strong your customer ledger looks.
What hidden fees should I watch for?
Monthly minimums that charge you even when you do not draw, audit or due diligence fees, credit check charges on your own customers, premiums for same day funding, and early termination penalties if you leave before the term ends. Ask for a full fee schedule in writing.
Does it cost more if my customer pays late?
Almost always, because the fee is charged per 30 days the invoice remains unpaid. A 3% monthly rate on an invoice settled after 75 days costs about 7.5%. Your customers' payment habits drive your bill more than your own credit does.
How do I compare two invoice finance quotes properly?
Ask each provider for the total dollars payable on the same sample invoice, at your real average payment days, with every fee included. Then ask for the same figure assuming your customers pay a month later than usual.
