Invoice finance vs invoice factoring: what’s the difference?
Both use your unpaid invoices to access money. But how they work — and who your customers deal with — is very different.
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The key difference: who collects from your customers?
Invoice finance: You keep control. You raise the invoice, you collect payment from your customer as normal. The finance provider advances you money against that invoice — and your customer never knows.
Invoice factoring: The factoring company buys your invoice and collects payment from your customer directly. Your customer is notified and pays the factor, not you.
| Feature | Invoice Finance (Fundtap) | Invoice Factoring |
|---|
| Who collects payment from customers? | You (as normal) | The factoring company |
| Do customers know? | No (confidential) | Yes (they're notified) |
| Control of customer relationship | You keep full control | Shared with factor |
| Whole ledger required? | No (selective) | Usually yes |
| Minimum term | None | Often 6-12 months |
| Fee structure | One flat fee per invoice | % of invoice value + admin fees |
Which is right for you?
If you want to keep your customer relationships intact and your finance confidential, invoice finance is the right choice. Factoring works for businesses where customer contact from a third party isn’t a concern — but for most SMEs, confidentiality matters.
“Fundtap has been a game-changer for our construction business. We get funded the same day we submit an invoice — no waiting 60 days to pay our subbies.”
Sam T., Construction Business Owner, Auckland
Common questions
Is invoice factoring the same as debtor finance?
The terms are often used interchangeably in New Zealand and Australia. Debtor finance is the general category; factoring is a specific type where the factor collects from your customers directly.
Does Fundtap notify my customers?
No. Fundtap is completely confidential. Your customers pay you as normal — Fundtap never contacts them.
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