When you’re waiting for payment on invoices, your business loses momentum. You can’t pay suppliers, meet payroll, or invest in growth. That’s where debtor finance comes in — it lets you convert unpaid invoices into cash immediately, keeping your cash flow moving while your customers take their time to pay.
What Is Debtor Finance?
Debtor finance (also called invoice financing or receivables financing) is a form of lending where you use your unpaid invoices as security to borrow money. Instead of waiting 30, 60, or 90 days for payment, a finance company advances you a percentage of the invoice value — typically 80–95% — within 24–48 hours.
You continue to collect from your customers as normal. When they pay, you repay the finance facility plus a fee (usually 1–3% of the invoice value). It’s clean, simple, and requires no personal guarantees on many facilities.
Who Benefits From Debtor Finance?
Debtor finance works well for businesses with strong invoicing but tight cash flow:
- B2B service providers: Consultants, contractors, and agencies invoicing clients with 30–90 day payment terms
- Trade businesses: Builders, plumbers, and electricians on large commercial projects with progress billing
- Wholesalers & distributors: Supplying retailers or corporate clients who pay on extended terms
- Manufacturers: Producing goods for larger buyers with extended payment windows
- Growth-stage businesses: Expanding rapidly and needing cash to keep up with demand
The common thread: you have good, quality invoices but your payment terms create a cash flow gap.
Key Benefits of Debtor Finance
Instant cash flow: Get 80–95% of invoice value within 24–48 hours instead of waiting 30–90 days. This keeps your business moving.
Flexible drawdown: You only borrow when you need it. Invoices in, borrow against them. No set monthly repayment — you repay as customers pay.
Scale with your business: As your sales grow, your available credit grows automatically. No need to reapply.
No personal guarantee: Many debtor finance facilities don’t require personal guarantees from directors — the invoices themselves are the security.
Improve supplier relationships: With consistent cash, you can pay suppliers early and negotiate better terms.
How Debtor Finance Works Step-by-Step
1. Apply: Provide your ABN, business financials, and details of your typical customers and payment terms. Approval typically takes 3–5 days.
2. Set your facility: The lender assesses your customer quality and invoice frequency, setting a maximum facility size (e.g., $100,000).
3. Invoice and borrow: When you issue an invoice, send it to the finance company. They’ll advance you 80–95% immediately.
4. Customer pays: Your customer pays you directly (or the finance company) as agreed. You repay the advance plus the fee.
5. Repeat: Once repaid, that credit is available again. No limits on how often you draw and repay.
Frequently Asked Questions
What invoices can I finance?
Domestic invoices to ABN-registered businesses with good payment history typically qualify. Most lenders won’t finance invoices to overseas customers or consumers. Your finance company will review each invoice and decide whether to advance against it based on customer creditworthiness.
What if my customer doesn’t pay?
With recourse debtor finance, you’re responsible for any unpaid invoices — the finance company can come back to you. With non-recourse (also called factoring), the finance company assumes the risk if your customer defaults. Non-recourse is more expensive but offers protection. Discuss which suits your business.
How much does debtor finance cost?
Typical costs are 1–3% of the invoice value, depending on your credit quality, customer quality, and facility size. There may also be a monthly facility fee ($200–500) if you don’t draw regularly. Compare multiple lenders to find the best rate for your situation.
Get Fast Cash Against Your Invoices
At Co-Pilot Finance & Insurance, we connect growing businesses with specialist debtor finance lenders who understand your industry and your cash flow challenges. Whether you’re managing progress billing on large projects or financing rapid growth, we’ll structure a debtor finance facility that keeps your business moving.