Invoice and Debtor Finance: Broker Assessment

Invoice finance brings forward cash from eligible unpaid invoices so a business can meet costs before its customers pay. Debtor finance is another name for this receivables-backed funding. For a broker, the assessment starts with the invoices that can be funded, the customers who owe them and the client’s ability to manage the facility.

An approved limit is a ceiling. The amount available today also depends on invoice eligibility, debtor limits, reserves and funding already drawn. Fees reduce the margin the business keeps from each sale.

Define the Cash-Flow Need

Map the client’s cash shortfall by matching payment obligations to when its customers actually pay. Record the funding purpose and the largest cash shortfall across the trading cycle. Use payment history alongside contractual invoice terms.

The cash-conversion cycle runs from paying for stock or labour to receiving the customer’s money. A profitable supplier can still run short of cash when it pays employees weekly and customers pay monthly. Invoice finance advances part of an eligible receivable during that gap.

For example, a fictional Perth packaging supplier delivers goods to an Australian retailer in October 2026. The retailer owes $20,000 on 30-day terms. If a facility accepts that invoice, an advance funds the supplier’s next operating expenses before the retailer pays.

The retailer’s payment then clears the funded amount under the agreed collection arrangements. Any retained balance is released after fees and other adjustments. A facility that collects from the supplier by direct debit follows its own repayment date, so late customer payment still creates a cash obligation.

Invoice lending, invoice funding and requests for “invoice money” concern this unpaid receivable. Creating an invoice in accounting software doesn’t establish that the debt is eligible for finance.

Separate a recurring timing gap from an operating loss. Bringing forward a sale’s cash doesn’t increase its profit, and funding fees reduce it. A disputed debt needs its dispute resolved, while a one-off equipment purchase can call for a different repayment structure.

Invoice finance is based on amounts customers already owe. Stock held for resale supports inventory finance. If the client needs to fund unsold stock, use the inventory finance assessment to test that funding base.

Establish facility suitability before choosing a lender. The invoice finance providers guide addresses the provider-selection decision once the receivables and funding need are clear.

Test Invoice Eligibility

Test invoice eligibility by proving that the client completed the sale and the customer owes an enforceable, unpaid amount. Begin with completed business-to-business sales on agreed credit terms. Match the invoice to the order, delivery evidence or approved service record.

Keep the following claims separate from the ordinary eligible ledger until the proposed facility’s written criteria accept them.

Invoice or claim	Evidence and question to resolve
Overdue or aged invoice	Show days outstanding and collection history. Apply the facility’s funding-age limit.
Disputed amount	Identify the dispute and any accepted portion. A raised invoice alone doesn’t settle the dispute.
Milestone or progress claim	Prove the stage is completed and approved. Identify certification conditions and retentions.
Contingent invoice	Establish whether a further event must occur before payment is owed.
Related-party sale	Disclose common ownership and prove the transaction is genuine.
Consumer invoice	Identify the debtor as an individual and use the provider’s specific eligibility rule.

Provider rules differ. FundTap’s eligibility page, reviewed 26 August 2026, includes business and consumer customers for completed work. It excludes invoices already past their due date.

That consumer allowance doesn’t make consumer invoices eligible under a different business-to-business facility. Likewise, an accepted progress claim doesn’t establish that future work or an unapproved variation can be funded.

An “invoice loan” still needs debtor verification and an eligible receivable. Establish whether the agreement funds a selected invoice, a selected debtor’s invoices or the whole eligible ledger. Record which invoices must be submitted even when the client doesn’t need to draw against all of them.

Assess Debtors and Concentration

Assess debtor quality by reviewing how much each customer owes, how reliably it pays and what can reduce the amount collected. An aged receivables ledger groups unpaid invoices by time outstanding. Reconcile its largest balances to customer statements and subsequent receipts.

Dilution is the reduction between the amount invoiced and the amount ultimately collected. Returns, rebates, credit notes and disputed work can cause it. A ledger with high sales and frequent credits supports less funding than its gross invoice total suggests.

Review the largest debtor and the largest group of related debtors. Concentration is the share of receivables owed by one customer or group. If that customer pays late, a large part of the funding base can disappear at once.

National Australia Bank (NAB) explains debtor limits, concentration deductions, credit notes and recourse adjustments in its invoice finance client guide, available as at October 2026. Those adjustments reduce its borrowing base, the receivables value available to support funding. They aren’t universal percentages for other providers.

Worked Example: Available Funds

This fictional October 2026 facility has a $150,000 approved limit and an agreed 80% advance rate. Its assumed agreement applies the following exclusions before calculating the advance.

Calculation	Amount
Unpaid ledger	$200,000
Disputed and otherwise ineligible invoices	-$30,000
Eligible debt above an agreed debtor limit	-$20,000
Receivables accepted for the calculation	$150,000
Maximum advance at 80%	$120,000
Funding already drawn	-$90,000
Further funds available	$30,000

The $150,000 facility doesn’t give the client another $60,000 to draw. In this example, eligibility deductions reduce the maximum advance to $120,000. The unpaid balance already drawn leaves $30,000 available, assuming no further charges or adjustments.

Use the proposed provider’s calculation order for a real application. Add any separate reserves and accrued fees exactly where its agreement requires them. Don’t deduct the unadvanced portion twice.

Compare Recourse, Control and Cost

Compare invoice-finance structures by which debts they fund, who collects them and who carries the risk when customers don’t pay. The name on a product page doesn’t settle those terms.

Structure	Funding scope	Collections and disclosure
Invoice factoring	Receivables assigned under the agreement, often with receivables administration	The financier administers collections in a disclosed arrangement. Confirm the debtor notice and payment instructions.
Invoice discounting	Eligible receivables supporting advances	The business commonly manages collections. Confidentiality depends on the agreement and collection-account requirements.
Selective invoice finance	Selected invoices or debtor accounts	Collection responsibilities follow the selected product’s terms. Selection doesn’t establish confidentiality or non-recourse protection.
Single-invoice funding	One accepted invoice	Confirm the repayment date and whether the financier collects from the debtor or the business.

ScotPac’s 2 October 2026 explanation assigns collections to the business for invoice discounting. It assigns receivables management and collections to ScotPac for factoring, with customers aware of the arrangement. This illustrates collection models without deciding which provider a client must choose.

Recourse means the business bears an agreed repayment obligation if the debtor doesn’t pay or the invoice becomes ineligible. Non-recourse protection covers only the risks specified in the contract. Debtor insolvency cover doesn’t automatically cover a dispute over defective work.

Confidential or undisclosed invoice finance concerns debtor notification. It doesn’t establish who bears non-payment risk. Compare the recourse events and deadlines separately from the collections arrangement.

Read the proposed agreement for these controls before recommending a facility.

• Establish the advance rate and any reserve held against dilution or other risks.
• Identify debtor verification procedures and who can contact customers.
• Record required ledger uploads, reconciliation deadlines and financial covenants.
• Identify the collection account and how misdirected receipts must be handled.
• List receivables security, guarantees and any other security the agreement requires.
• Record the minimum term, notice period and exit charges.

Worked Example: A Funding Fee

This fictional Australian supplier example uses FundTap’s published pricing illustration, reviewed 19 August 2026 and accessed in October 2026. Its pricing page shows a $4,500 invoice due in 30 days, a $4,050 advance and an estimated $235 fee.

Assume the supplier funds that invoice on those illustrated terms and the customer pays on time. All amounts below are Australian dollars.

Cash movement	Amount
Advance received now	$4,050
Customer payment on the due date	$4,500
Advance plus fee collected by direct debit	-$4,285
Customer receipt remaining after repayment	$215
Total retained from the sale, including the earlier advance	$4,265

The $235 fee is about 5.22% of the invoice value and 5.80% of the advance. It isn’t an annual interest rate. The advertised starting fee of 4% doesn’t calculate this particular example’s total cost.

FundTap describes the figure as an estimate and quotes the exact fee before acceptance. Its pricing page says duration changes can change the fee. These figures preserve the displayed cash calculation without assuming an additional goods and services tax (GST) amount or a GST credit.

For a quoted facility, total the establishment fee, funding charge, service or purchase charge and any minimum monthly amount. Add applicable verification, renewal and termination charges over the expected usage period. Record each charge’s calculation base and GST treatment from the quote.

Translate “fast”, “instant” or “flexible” funding claims into conditions. Separate initial approval from invoice approval and bank transfer timing. Identify required debtor checks and whether flexibility concerns invoice selection, drawdowns, repayment extensions or contract exit.

Prepare the Facility Evidence

Prepare a facility file that connects the requested limit to verified receivables and the client’s cash shortfall. Keep the financial evidence on consistent dates so the assessor can follow each adjustment.

Evidence	What to reconcile
Aged receivables ledger	Debtor totals, invoice dates, credits, exclusions and subsequent receipts
Sales records and invoices	Ledger amounts, completed sales and the correct contracting entity
Orders, delivery records and service approvals	Goods delivered or work completed before the invoice became payable
Debtor contracts	Payment terms, retention, dispute rights and restrictions relevant to assignment
Business bank statements	Customer receipts, existing finance payments and cash available for operating costs
Financial accounts	Trading margin, losses, liabilities and the consistency of sales with the ledger
Tax returns and current tax records	Lodged income, tax liabilities and payment commitments
Cash-flow forecast	The peak shortfall, expected drawdowns and receipts that repay them
Existing facility and security documents	Funded debts, guarantees and security that could conflict with the proposed facility

Put every excluded invoice in a schedule with its amount and reason. Document assumed payment dates and the effect of later payment. Show the limit calculation separately from the amount available on the proposed first drawdown date.

Invoice-finance fraud can involve fictitious sales, duplicate invoices or the same receivable funded twice. Match invoices to delivery or service evidence and independently confirm debtor payment details. Reconcile existing funding before presenting a receivable as available security.

An online application or a low-documentation product label doesn’t remove these evidence checks. Accounting-system access can supply the ledger, but it doesn’t resolve a dispute or prove an uncompleted sale.

Assess Small-Business and Startup Fit

For a small business or startup, completed sales and reliable collections establish the possible funding base. Test whether fees leave an adequate trading margin.

A short operating history and an absence of eligible receivables are different problems. A pre-revenue startup has no issued, completed receivables to fund through this structure.

NAB’s invoice finance page, as at October 2026, lists at least 12 months of trading and annual turnover above $1 million. It also requires strong receivables systems. Those are NAB’s criteria, not a minimum for every Australian invoice-finance product.

A younger business with completed invoices still needs an assessment of its debtor quality and capacity to repay. Customer concentration and owner guarantees can matter even when a provider accepts the trading history.

For a fictional October 2026 small business, assume a $10,000 completed sale has $9,000 of direct costs. An assumed $400 total funding charge leaves $600 before overheads and tax, compared with $1,000 before funding. The charge is a scenario assumption, not a provider quote.

Bringing forward cash can let that business pay wages while it waits for the customer. Repeated funding reduces its margin, and recourse can create a repayment demand if the customer defaults. Assess whether the business can manage reporting and collections alongside its ordinary work.

If the need exists before any eligible invoice, compare an unsecured business loan by the business’s cash flow and repayment capacity. The suitable funding structure follows the available evidence and funding purpose.

Assess Recruitment Invoice Eligibility

Assess recruitment invoice finance by matching approved labour invoices to the payroll costs due before clients pay. Confirm the contracting customer, agreed rates and authorised timesheets. Reconcile invoiced hours to the hours worked and the wage bill.

Separate temporary labour invoices from permanent placement fees. Recurring labour invoices can relate to completed, approved work. A placement fee can depend on a start date, guarantee period or replacement condition in the recruitment contract.

If a customer disputes a placement fee, exclude that amount from the ordinary funding calculation until its status is resolved. For each invoice class, obtain the provider’s written acceptance and treatment of credits or replacement obligations. These decisions set the usable ledger.

Consider a fictional agency with $40,000 of weekly payroll and clients paying on 30-day terms. Four weekly payroll runs require $160,000 before allowing for tax, superannuation and other costs. An eligible ledger of $100,000 with an assumed 80% advance supports only $80,000 before other deductions.

That advance covers two payroll runs, so the broker must account for the remaining shortfall. Map existing cash and staggered customer receipts to each pay date. Then stress-test a delayed payment from the largest client and an invoice removed after a timesheet dispute.

Exit or Switch an Invoice-Finance Facility

To close an invoice-finance facility, settle the funded receivables and coordinate collections with security release. A switch also needs replacement funding.

Set the exit date from the current agreement’s notice and settlement requirements. Disconnecting accounting software doesn’t close a funded facility.

1. Read the minimum term and notice clause. Calculate termination charges and identify reserves, recourse obligations, outstanding fees and guarantees that survive closure.
2. Obtain a dated payout figure. Reconcile every funded invoice to receipts and credits, and identify the balance that replacement funding must cover.
3. Agree the collections handover. Name who contacts debtors, who issues new payment instructions and who reconciles receipts paid to the old account.
4. Coordinate settlement and security release. Confirm how the existing provider receives payment before the replacement provider relies on those receivables.
5. Obtain written closure and security-release confirmation. Reconcile released reserves and any remaining liabilities, then record who handles receipts arriving after the switch.

Keep a single receivables handover schedule showing which provider holds each invoice at each stage. Use an agreed settlement arrangement where funding and release must occur together. Only include a transferred invoice in the new available-funds calculation once the transfer conditions are met.

The client can then draw from a documented funding base with clear collection responsibilities. Match that first available amount to the next payroll or supplier payment before completing the switch.