Updated on 24th July 2026
Small and medium-sized enterprises (SMEs) may not always be sure what Invoice Finance is, or why it can be a useful working capital solution for Australian business-to-business companies.
When slow-paying customers affect your cash flow, Invoice Finance can help unlock access to money owed to you but tied up in unpaid invoices. This can help keep operations moving, allow your own bills to be paid and give your business more room to take up growth opportunities.
In simple terms, Invoice Finance lets Australian B2B businesses access a large portion of their invoice value earlier, instead of waiting for customers to pay.
Explore ScotPac’s tailored Invoice Finance solution today.
What is Invoice Finance?
Invoice Finance is a working capital facility secured by your outstanding business-to-business invoices.
As a funding solution, it lets Australian B2B businesses access money tied up in unpaid invoices before their customers pay them.
Why does Invoice Finance matter for Australian B2B businesses?
Customers can take 30, 60 or even 90 days to settle invoices.
During this time, SMEs can struggle to:
- invest in new stock or inventory
- meet seasonal demand
- pay overhead expenses
- meet payroll
- pay suppliers
- settle tax obligations
- grow the business
The longer the payment terms, the longer it takes to convert accounts receivable into cash. Cash flow is an important part of running a successful business, and when cash is not coming in reliably and consistently, gaps can be created.
Invoice Finance gives businesses more control over bridging these cash flow gaps.
How does Invoice Finance work for Australian businesses?
The process is straightforward. An Invoice Finance facility is based on your sales ledger.
- First, you raise an invoice for goods or services supplied to a customer.
- Then you submit the invoice, or invoices, for financing.
- Your funding partner, such as ScotPac, advances a percentage of the invoice value, up to 85% in Australia.
- You can use the accessed funds as needed.
- Your customers settle their unpaid invoices.
- The lender provides you with the remaining balance, less applicable fees.
How does Invoice Finance help bridge cash flow gaps? By accessing cash tied up in unpaid invoices, your business can manage cash flow with more control, rather than waiting on your customers’ payment timing.
Which businesses use Invoice Finance most often in Australia?
Invoice Finance is designed for B2B businesses. In other words, your business must provide goods or services to other businesses, rather than selling directly to consumers.
Invoice Finance is particularly suited to industries with large invoice values and longer payment cycles, such as:
- manufacturing
- wholesale trade
- transport
- recruitment
- trade services
- professional or corporate services
Regardless of industry, it is important that your business has reliable debtors. In other words, customers who may take time to pay, but are trustworthy in settling their accounts.
What do Invoice Factoring and Invoice Discounting mean?
Broadly speaking, there are two main forms of Invoice Finance, with slightly different meanings:
- Invoice Factoring
- Invoice Discounting
Both use unpaid invoices to provide earlier access to working capital. However, they differ in how collections of those unpaid invoices are managed.
How does Invoice Factoring work?
With Invoice Factoring, your lender manages the collection of payments from your customers or clients.
This can suit smaller SMEs that want to outsource accounts receivable work and do not mind customers being aware of the finance provider’s involvement.
How does Invoice Discounting work?
With Invoice Discounting, your business remains responsible for collecting payments. You access working capital through the Invoice Finance facility while keeping control of customer relationships.
This form of Invoice Finance can suit established businesses with strong debt collection processes and resources, and those wanting more confidentiality and control.
If you’re unsure which structure is right for your internal credit control process, customer relationships and cash flow needs, speak to the ScotPac team.
What are the benefits of Invoice Finance for cash flow?
In essence, Invoice Finance reduces the pressure on cash flow caused by slow-paying customers.
Key benefits include:
- faster access to working capital
- funding that can scale with your business as your sales ledger expands
- no need for property to act as security
- greater control over your ability to pay wages, suppliers and operating costs
- improved consistency in cash flow during seasonal sales cycles
What is the difference between Invoice Finance and a business loan?
Invoice Finance does not work in the same way as a traditional business loan.
A loan provides a lump sum of borrowed capital that needs to be repaid over time in regular instalments, plus interest.
A secured business loan may also require an asset, such as property, to serve as security.
In contrast, Invoice Finance works by releasing cash already owed to the business but locked up in unpaid accounts receivable. The unpaid invoices serve as collateral, meaning there is no need to put up property as security. As your business expands and sales increase, the amount of working capital you can access through your facility can scale with you, subject to eligibility and facility terms.
For growing businesses held back by unpaid invoices, Invoice Finance can provide more flexibility and control than some debt-based funding options, such as traditional loans.
Learn more about ScotPac’s Invoice Finance.
Why choose Invoice Finance with ScotPac?
For more than 35 years, ScotPac has been helping Australian businesses better manage their cash flow.
We currently support more than 9,300 businesses and fund $26.3 billion in invoices annually.
Our lending specialists work with you to understand your business needs and objectives, so we can tailor a working capital solution that is right for your situation.
Find out more about what Invoice Finance is, how it can work for your business and how to apply here.
