Invoice Finance in New Zealand, Explained for Suppliers
Invoice finance advances you cash against invoices you have already issued, usually around 80% of the value within a day or two, for a fee of roughly 1% to 4% per 30 days the invoice stays unpaid. It turns your debtors ledger into working capital. The catch is the cost, and the recourse clause most facilities carry.
What Invoice Finance Is, and Where It Sits
If you have sold on credit terms and are now waiting 30, 60 or 90 days to be paid, invoice finance lets a financier advance most of that money immediately. You get cash now; they get repaid when your customer settles, plus a fee. It is the most common way NZ businesses turn unpaid invoices into usable cash.
The vocabulary is slippery, so to be precise about it. Invoice discounting usually means you keep collecting from your customers and the arrangement is confidential. Invoice factoring usually means the financier collects directly and your customer is told. Debtor finance is an umbrella term for both. Providers use these words loosely, so judge an offer on what the agreement actually says.
Where this guide sits. This page is about money owed to you. If you are the buyer trying to pay a supplier invoice, you want the Stock Finance guide instead. For the underlying concept of selling on credit at all, see the Trade Credit guide.
What It Costs in New Zealand
There is no official NZ rate survey for invoice finance, so these ranges come from what providers and comparison sites publish about themselves.
| Charge | Typical NZ range |
|---|---|
| Discount or service fee | 1% to 4% per 30 days the invoice is outstanding, with some quotes up to 5% a month |
| Advance rate | Commonly around 80% of invoice value upfront |
| Setup or establishment fee | About $500 to $2,000 |
| Monthly management fee | About $50 to $200, charged whether or not you draw |
| Other charges | Monthly minimums, audit fees, credit checks on your customers, same day funding premiums, early termination penalties |
The number worth calculating yourself: a 3% fee plus a $100 monthly charge on a $10,000 invoice is about $400 for 30 days, which annualises to well over 40%. That is not automatically a reason to say no, because an overdraft at 12% is no help if the bank will not grant one. It is a reason to be precise. How much invoice finance costs in NZ works through the full example and what moves your rate.
The Three Things to Check Before Signing
- 1. Recourse. Most facilities are "with recourse", meaning an invoice your customer never pays comes back to you. You are borrowing against your debtors, not selling the risk. Facilities without recourse exist and cost more. This single clause matters more than the headline rate.
- 2. Disclosure. Will your customers be told, and will the financier contact them? For a supplier with a few large accounts, a disclosed facility can read as a sign of distress. Ask directly, and ask what their collection tone is.
- 3. The total fee schedule, in writing. Monthly minimums and termination penalties are where facilities get expensive. Ask for the total dollars payable on one representative invoice at your real average payment days, then ask again assuming your customers pay a month later.
Before any of that, cut your debtor days. The fee is charged per 30 days outstanding, so your customers' payment behaviour sets your bill. Reducing debtor days without damaging relationships is the cheapest rate cut available.
The Alternative: Don't Let the Invoice Age at All
Invoice finance is a cure for a ledger that has already built up. The other approach is to stop building one: let the customer choose instalments at the point of sale, and be paid in full immediately instead.
That is what PaidTerms does. Your customer picks 3, 6 or 9 monthly instalments, you are paid the full invoice within 12 hours for a 1.5% merchant fee, and PaidTerms collects the instalments. There is no advance rate holding back 20%, no setup or monthly facility fee, and no clock that keeps running if the customer is slow. See pricing.
The honest limitation: it works on new sales, not on invoices you issued two months ago. If your problem is a backlog, invoice finance is the right product and this is not. Many suppliers end up using both, for exactly that reason.
Every Invoice Finance Article
Costs and Comparisons
- How Much Does Invoice Finance Cost in NZ? — fee ranges, a worked example, and the hidden charges
- Invoice Finance vs a Trade Credit Account: Which Should NZ Suppliers Choose? — the decision, in one table
- Trade Credit vs Invoice Finance: What's the Difference? — start here for the definitions
- Invoice Factoring in NZ vs PaidTerms
- Trade Credit vs a Business Loan
Fixing the Underlying Problem First
- What Are Debtor Days and How Do You Calculate Them?
- How to Reduce Debtor Days Without Damaging Customer Relationships
- Why Are Your Debtor Days Increasing?
- How to Read an Accounts Receivable Aging Report
- What Happens If a Customer Doesn't Pay Your Invoice in NZ?
- Can You Charge Interest on an Overdue Invoice in NZ?
The Alternative: Being Paid Upfront
- How to Offer Payment Terms Without Becoming the Lender
- The Hidden Cost of Offering Trade Credit
- Business BNPL vs Trade Credit
- What Are Business Instalment Payments?
Related Guides
- B2B BNPL guide — the category that pays you at the point of sale
- Trade Credit guide — how credit between businesses works
- Accounts Receivable guide — debtor days, aging reports and getting paid
- Cash Flow guide — working capital and the cash conversion cycle
- Stock Finance guide — the buyer's side, for paying supplier invoices
Or Stop the Ledger Building Up in the First Place
Let your customer pay in 3, 6 or 9 monthly instalments while you're paid the full invoice within 12 hours. One merchant fee of 1.5%, no facility, no advance rate.