Is business factoring right for small businesses?

Business factoring can help small businesses manage cash flow, but traditional providers often require minimum turnover thresholds and lock-in contracts. Fundtap has no minimums and no lock-ins, making it accessible for small businesses.

What is the typical cost of business factoring?

Business factoring rates typically range from 1–5% per month on invoice value, plus admin fees. Fundtap charges a single transparent fee starting from 4% with no monthly or admin fees.

How quickly does business factoring release funds?

Most traditional business factoring providers release funds within 1–3 business days. Fundtap transfers funds within hours of invoice selection.

What are the main disadvantages of business factoring?

Traditional business factoring often involves customer notification, whole-ledger assignment, lock-in contracts, and complex fee structures. Fundtap avoids all of these drawbacks.

What Is Business Factoring & How Does It Work?

Q: What is business factoring?

Business factoring is when a business sells outstanding invoices to a finance company for immediate cash. The finance company then collects payment from the business's customers and charges a fee for the service.

What Is Business Factoring?

Business factoring is a funding method where a business sells its unpaid invoices to a finance company for immediate cash. It allows businesses to unlock money tied up in outstanding invoices without waiting for customers to pay — improving cashflow without taking on traditional debt.

Business factoring is also known as invoice factoring, debtor finance, or accounts receivable financing. Regardless of the name, the core concept is the same: convert your unpaid invoices into working capital now.

How Business Factoring Works

Complete the work and invoice your customer — as you normally would.
Submit the invoice to a business factoring provider like FundTap.
Receive up to 90% of the invoice value within hours.
Your customer pays at the original due date — repayment is automated.
Receive the remaining balance minus a small fee.

Why Businesses Use Factoring

Business factoring solves one of the most common problems facing small and medium businesses: the gap between completing work and getting paid. This gap can create serious cashflow problems — making it hard to pay staff, cover costs, or take on new work.

FundTap makes business factoring simple. Connect your accounting software in minutes, select which invoices to fund, and get paid the same day. No paperwork, no lock-ins.

Available for Australian and New Zealand businesses
Works with Xero, MYOB, QuickBooks, and Reckon
No minimum invoice volumes or long-term contracts
Transparent, straightforward fees

See how FundTap works step by step →

Is Invoice Factoring Right for My Business?

Invoice factoring can be an excellent financial solution for many businesses, but it’s important to determine if it’s the right fit for your specific situation. Here, we break down the key factors to help you decide.

Who can use business factoring?

Good fit: Any B2B business that issues invoices — including transport, manufacturing, wholesale, staffing, construction, trades, and professional services.
Less suitable: Businesses that operate purely on cash or card transactions (retail, hospitality), or those with very irregular invoicing.

What are the benefits of business factoring?

Immediate cashflow: Convert invoices to cash within hours, not weeks.
No new debt: Factoring is not a loan — you are accessing money you have already earned.
Flexible: Fund only the invoices you need to, when you need to.
Supports growth: Access capital to take on more work without waiting for payment on existing jobs.

What are the risks of business factoring?

Fees reduce your margin: The factoring fee is a cost of accessing early payment — factor this into your pricing.
Customer awareness: In traditional factoring, customers may be contacted by the factoring company. With FundTap, your customers pay you as normal.
Invoice quality matters: Only valid, undisputed invoices to creditworthy customers will typically be approved for funding.

Frequently Asked Questions

What is business factoring?

Business factoring is when a business sells its unpaid invoices to a finance company for immediate cash. Also called invoice factoring or debtor finance, it allows businesses to access money tied up in outstanding invoices without waiting for customers to pay.

How does business factoring work?

You issue an invoice as normal, submit it to a factoring provider like FundTap, and receive up to 90% of the value upfront. When your customer pays at the invoice due date, repayment is automated and you receive the remaining balance minus a small fee.

Is business factoring the same as a business loan?

No. Business factoring is not a loan. You are accessing money you have already earned through invoices — there is no new debt on your balance sheet and no repayment schedule separate from your customers paying their invoices.

How much does business factoring cost?

Business factoring fees typically range from 1% to 5% of the invoice value, depending on the provider, invoice size, and payment terms. FundTap charges transparent, straightforward fees with no hidden costs.

How quickly can I get funded through business factoring?

With FundTap, you can receive funds the same day you submit invoices through your connected accounting software. Traditional factoring providers may take 24–72 hours.

How is FundTap different from traditional business factoring?

Traditional business factoring often involves contracts, minimum volumes, and the factoring company contacting your customers directly. FundTap offers on-demand funding with no lock-ins — you choose which invoices to fund, and your customers pay you as normal. Repayment to FundTap is automated.

Can I use business factoring alongside other funding?

Yes. Business factoring is flexible and can be used alongside other business finance tools. Many businesses use FundTap to bridge cashflow gaps while also maintaining a bank overdraft or line of credit for other needs.

How Fundtap’s Invoice Factoring works

Connect Your Accounting Software

Select Your Invoice(s)

Receive Cash Within Hours

Repayment Is Automated

View Demo

How does Fundtap compare?

		Online Invoice Factoring	Traditional Factoring
Easy to establish
Online and mobile
Link to Accounting System
Application approval	1 hour	48 hours +	2 weeks +
Quick funding	Minutes	Days	Days
No Establishment fees
No Admin or System fees
Use only when needed, without penalty

Learn more about Business Factoring & Cashflow

Read our latest guides on business factoring, invoice finance, and cashflow management for Australian SMEs.

Managing Cash Flow in the Freight and Logistics Industry

An In-Depth Guide To Invoice Factoring