Does debtor factoring notify my customers?

Traditional debtor factoring does notify your customers, as the debt is legally assigned to the factoring company. Fundtap invoice financing is confidential — your customers never know.

What are the typical costs of debtor factoring?

Debtor factoring fees typically range from 1–5% per month plus admin and service fees. Many providers also require minimum monthly volumes and long-term contracts.

What is the difference between debtor factoring and invoice discounting?

With debtor factoring, the finance company manages collections from your customers. With invoice discounting, you retain control of collections and the arrangement is typically confidential.

Debtor Factoring — What It Is, How It Works & Alternatives

Q: What is debtor factoring?

Debtor factoring is when a business sells its outstanding customer invoices (debtors) to a finance company in exchange for an immediate cash advance. The finance company then collects payment from the customers.

What Is Debtor Factoring?

Debtor factoring is when a business sells its unpaid invoices — also called debtors — to a finance company in exchange for immediate cash. It is the same product as invoice factoring, just using a different term more common in New Zealand and the UK.

Instead of waiting weeks or months for customers to pay, you access most of the invoice value upfront. The finance company then collects payment from your debtors when the invoice falls due.

How Debtor Factoring Works

You complete a job or deliver goods and issue an invoice to your customer.
You submit the invoice to a debtor finance company and receive up to 90% of its value immediately.
Your customer pays the finance company at the agreed payment date.
You receive the remaining balance minus the factoring fee.

Debtor Factoring vs FundTap — A Simpler Way to Unlock Cash

Traditional debtor factoring companies often require long-term contracts, minimum volumes, and take over your debtor management — meaning your customers know a third party is chasing payment.

FundTap gives you the cash flow benefits of debtor factoring without the downsides. You connect your accounting software, choose which invoices to fund, and receive cash the same day. There are no lock-ins and no minimum commitments.

Available in both Australia and New Zealand
Connect Xero, MYOB, QuickBooks, or Reckon
Same-day funding with no hidden fees
You keep control of your customer relationships

See how FundTap invoice financing works →

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.

Is debtor factoring the same as invoice factoring?

Yes. Debtor factoring and invoice factoring refer to the same product — selling unpaid invoices (debtors) for immediate cash. The term debtor factoring is more common in New Zealand and the UK, while invoice factoring is more widely used in Australia and internationally.

What types of businesses use debtor factoring?

Good fit: B2B businesses with invoices due in 30–90 days — including transport, logistics, manufacturing, staffing agencies, and trade services.
Less suitable: Retail or B2C businesses that do not use invoice-based billing.

Debtor factoring vs debtor finance — what is the difference?

Debtor factoring: You sell your invoices outright. The factoring company takes over collections from your customers.

Debtor finance / invoice financing: You retain ownership of your invoices and customer relationships. A lender advances funds against them, and repayment is automated when your customers pay — this is how FundTap works.

Frequently Asked Questions

What is debtor factoring?

Debtor factoring is when a business sells its unpaid invoices (debtors) to a finance company for immediate cash. It is the same as invoice factoring — a common term in New Zealand and the UK. The finance company advances most of the invoice value and collects payment from your customers.

Is debtor factoring available in New Zealand?

Yes. Debtor factoring is widely used in New Zealand. FundTap operates across both Australia and New Zealand, offering same-day funding against unpaid invoices with no lock-in contracts.

How does debtor factoring affect my customers?

In traditional debtor factoring, your customers pay the factoring company directly and know a third party is involved. With FundTap, your customers pay you as normal — repayment to FundTap is automated, so your client relationships are not affected.

How much does debtor factoring cost?

Debtor factoring fees typically range from 1% to 5% of the invoice value. FundTap charges transparent, straightforward fees with no setup costs or hidden charges.

What is a better alternative to debtor factoring?

FundTap invoice financing offers the same cash flow benefit as debtor factoring — immediate access to funds tied up in unpaid invoices — without handing over your debtor management. There are no contracts, no minimums, and you choose which invoices to fund.

How quickly can I access cash through debtor factoring?

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

Do I need to factor all my invoices?

With FundTap, no. You choose exactly which invoices to fund, on demand, with no obligation to submit your entire debtor book.

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 Debtor Factoring & Invoice Finance

Read our latest guides on debtor factoring, cashflow, and invoice financing alternatives for Australian and New Zealand businesses.

Managing Cash Flow in the Freight and Logistics Industry

An In-Depth Guide To Invoice Factoring