What invoice finance actually costs in New Zealand

Invoice finance lets a business draw down most of an unpaid invoice's value — typically 80% to 90% — within 24 to 48 hours of raising it, rather than waiting the usual 30, 60 or sometimes 90–120 days for the customer to pay. The remaining balance is released once the customer settles the invoice in full, less the funder's fee. The fee is charged per invoice, not as an annual interest rate, and that single fact is where most business owners misjudge the real cost.

Key Takeaways

How it actually works

You raise an invoice for a B2B customer, submit it — or your whole ledger, depending on the facility — to the funder, and the funder advances a percentage of its face value, often within a day. ScotPac's product page puts the advance at up to 80% of an eligible invoice's value, "often within 24 hours"; its own blog quotes up to 85%; its Debt Factoring product page states 80% of the approved invoice value paid within 24 hours, less fees, with the remaining 20% released once the customer pays in full. A worked example on ScotPac's blog uses a 90% advance. FundTap advertises funding up to 90% the same day once an invoice is approved.

That spread — 80% in one place, 85% in another, 90% in a worked example, from the same lender — reflects that the advance rate is set per facility and per invoice risk, sometimes varying by product within the same lender's range. Treat any advertised percentage as a ceiling, not a quote, and get the actual number confirmed in writing before you rely on it in a cash flow forecast.

Once the customer pays the invoice in full, the funder releases the balance it was holding back, minus its fee. You do not repay a loan in the conventional sense — you have sold or borrowed against an asset (the invoice) that was always going to convert to cash; invoice finance just moves that conversion forward.

Spot factoring versus a whole-ledger facility

There are two structurally different ways to use invoice finance, and confusing them is the most common mistake in this market.

Selective Invoice Finance, also called spot factoring, lets you choose which specific invoices to finance rather than committing your whole ledger. ScotPac describes this as typically used by SMEs with fewer, higher-value invoices, offering "greater flexibility" because you are not obliged to fund everything you bill. FundTap is built entirely around this model: you pick one invoice, several, or none, with no minimum and no lock-in. Its own comparison table contrasts this against "traditional factoring," which it says takes two weeks or more to set up, against FundTap's same-day approval and funding.

A Debt Factoring facility, by contrast, is a whole-ledger arrangement. ScotPac's product page states the facility limit "grows in line with your business revenue, so there is no need for regular re-negotiation" — you are financing the business's receivables as a rolling pool, and the funder typically takes over collections as part of the service.

A business with two or three large invoices a month and unpredictable cash gaps is usually better served by spot factoring. A business with dozens of smaller invoices and a structural, ongoing cash flow gap between billing and collection is usually better served by a whole-ledger facility.

What it costs — and what that looks like annualised

This is the calculation worth running before you sign anything. Every published fee example is a flat, one-off percentage of the invoice, charged once, not an annual rate:

Funder	Invoice value	Fee	Fee as %	What you receive
ScotPac (worked example)	$40,000	$800	2%	$39,200 total, in two tranches
ScotPac (worked example)	$10,000	$300	3% (plus any admin charges)	$9,700 less admin
FundTap	$4,500	$180	4% flat	$4,050 the same day, $4,320 in total

Take the ScotPac $40,000 example in full, because it shows both tranches. A 90% advance releases $36,000 within 24 hours. When the customer pays, ScotPac releases the remaining $4,000 less its 2% factoring fee — $800 — so the business receives $3,200 on settlement. Total received across both payments: $39,200 of the original $40,000 invoice.

That fee is quoted flat, not annualised — worth translating yourself before comparing invoice finance to an overdraft or term loan, because a flat fee on a short-dated invoice compounds fast once converted to a "per year" basis. ScotPac notes standard New Zealand business terms run around 30 days, though a customer can stretch that to 60, 90 or even 120 days in practice. Taking that 30-day standard as the holding period and annualising a flat fee against it (365 ÷ 30 ≈ 12.2 cycles a year):

• A 2% fee on a 30-day invoice works out to roughly 24% a year if you ran that cycle continuously.
• A 3% fee on a 30-day invoice works out to roughly 37% a year on the same basis.
• A 4% flat fee (FundTap's stated starting rate) on a 30-day invoice works out to roughly 49% a year on the same basis.

These are illustrative annualisations on a 30-day assumption — a shorter-dated invoice costs proportionally less, a longer-dated one more, since FundTap prices "for that invoice and the number of days until it's due." And almost no business runs the same invoice through the facility 12 times a year; you're financing a specific cash gap on a specific invoice, not carrying a rolling balance the way you would on a revolving credit line. Use the annualised figure to compare invoice finance against the cost of an overdraft or short-term loan for the same gap — not as a literal forecast of a year's cost.

Recourse versus non-recourse

Most New Zealand invoice finance is written on a recourse basis: if the customer doesn't pay in full, the business remains liable for the invoice amount. ScotPac is explicit that this keeps fees lower, because the funder's risk is reduced — you are the backstop, not them.

Non-recourse factoring shifts that risk to the finance company, and comes with a correspondingly larger fee. ScotPac doesn't currently offer non-recourse Invoice Discounting in New Zealand. Its blog also notes that "Bad Debt Protection" can be added to a recourse facility as a halfway option — a safety net for specific risky accounts without moving the whole facility to non-recourse pricing. If a funder pitches non-recourse cover, confirm exactly which invoices or debtors it applies to.

Will your customers find out?

This depends on the specific product, not the lender generally, and it's worth confirming before you ask about price.

ScotPac's dedicated Debt Factoring product page is unambiguous: "Yes, your customers will be aware of your partnership with ScotPac" — because ScotPac handles accounts receivable and collections as a third party under that specific product. Its factoring-vs-discounting blog draws the distinction more precisely: Invoice Discounting is completely confidential, because the business retains responsibility for its own collections and the customer never sees the funder; Invoice Factoring is "less confidential" because the funder is involved in collecting the debt directly, though it says a reputable provider works to preserve the customer relationship regardless.

FundTap's model keeps the funder out of collections entirely: "Your clients are never contacted by FundTap. Your customer pays your invoice to you, into your own account, on the terms you already agreed."

Confidentiality is a feature of the specific product, not of "invoice finance" as a category. If keeping this off your customers' radar matters — and for many businesses it matters a great deal — ask which product you're being offered and whether the funder or you retain collections.

Who this suits

Invoice finance is built for a specific shape of business: B2B trade credit sales, invoiced on standard terms, to creditworthy customers who reliably pay within 30 to 60 days, where the gap between delivering the work and being paid for it is the actual constraint on growth.

ScotPac's published eligibility criteria for New Zealand are concrete:

• Business-to-business trade-credit sales (not consumer sales)
• At least six months' trading history with consistent invoicing and collections
• Creditworthy New Zealand debtors with a reliable payment history
• At least $10,000 in invoices per month
• New Zealand-registered operations

Who this does not suit

ScotPac states plainly that businesses issuing invoices in stages, in advance, or to consumers may not be eligible, and that Invoice Finance in New Zealand is open to B2B SMEs only — some micro-businesses or start-ups may fall short simply on invoice volume or value.

There is a genuine split in the market on consumer-facing sales specifically. FundTap states its customers "can be other businesses or consumers," with most funded invoices due within 60 days and longer terms reviewed individually — so it doesn't rule out consumer invoicing the way ScotPac's mainstream criteria do. If your business sells to the public rather than to other businesses, check the specific funder's appetite rather than ruling the product out on a general assumption.

A ledger dominated by one large customer is a separate, real concern. Concentration limits — a maximum share of the facility that can sit with a single customer — aren't published; they're set per facility, so confirm the cap before you rely on your biggest customer's invoices as part of any facility you apply for.

The PPSR angle

Invoice finance facilities commonly involve a security interest over the business's receivables, registered on the Personal Property Securities Register. The mechanism is straightforward: a creditor registers a financing statement, which gives it priority over unsecured creditors and over anyone who registers a competing interest later, in relation to personal property put up as collateral. Registration is what protects a secured party's position if a customer — or the business itself — later defaults.

How exactly a PPSR registration is structured over your specific receivables varies by facility. Ask the funder directly what it covers and how it interacts with any general security agreement a bank may already hold over the business, before you sign.

Frequently Asked Questions

Is invoice finance the same as a bank overdraft? No. An overdraft is a revolving credit facility secured over the business generally, usually via a General Security Agreement. Invoice finance advances against specific, identifiable invoices, and the fee is charged per invoice rather than as daily or monthly interest on a drawn balance.

Can I use invoice finance for just one invoice? Yes — that's the specific purpose of Selective Invoice Finance (spot factoring). FundTap and ScotPac's Selective product both let you choose individual invoices with no obligation to fund your whole ledger.

Will my biggest customer find out I'm using invoice finance? It depends entirely on which product you're using. Invoice Discounting and FundTap's model keep the funder out of your collections entirely. Debt Factoring typically involves the funder collecting directly, and your customer will know. Confirm this per product, not per lender.

What happens if my customer doesn't pay? Under the standard recourse arrangement most facilities use in New Zealand, you remain liable for the invoice amount. Non-recourse cover, where the funder absorbs that risk, is not universally offered — ScotPac, for instance, doesn't offer it on Invoice Discounting — and comes at a higher fee where it is available.

Is the flat fee the whole cost? Check for admin charges on top of the headline percentage — ScotPac's own blog example flags "3%, plus any admin charges" without naming the admin figure. FundTap states no establishment, monthly or break fees. Get the full fee schedule in writing, not just the headline percentage.

Deplexifi arranges invoice finance facilities across New Zealand, Australia and the UK, and can tell you before you apply which structure — spot factoring or a full facility, recourse or not, disclosed or confidential — actually fits the gap you're trying to close.

The fee is quoted flat per invoice, not as an annual rate — a 2–4% fee on a 30-day invoice annualises to roughly 24–49%, which most business owners never work out until they compare it to an overdraft.

Nothing here is regulated financial advice. Deplexifi arranges commercial finance for businesses — this article describes general lending practice and the published position of the sources listed below, not a recommendation for any individual business.