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What to Look For in an Invoice Factoring Company
Choosing the right invoice factoring company in Australia is about more than just rates. The right provider depends on your business size, industry, customer relationships, and how much control you want to retain over your invoicing process.
Here are the most important factors to evaluate:
- Fee transparency: Look for a provider that clearly states all fees upfront — factoring rates, admin fees, service charges, and any minimum volume requirements.
- Customer notification policy: Some providers notify your customers; others offer confidential arrangements. Consider how this affects your client relationships.
- Whole-ledger vs. selective: Many factoring companies require you to assign your entire debtor ledger. Others, like Fundtap, let you fund only the invoices you choose.
- Speed of funding: How quickly do you receive funds after submitting an invoice? The best providers fund within 24 hours; Fundtap funds within hours.
- Contract terms: Watch for lock-in periods, minimum monthly volumes, and exit fees.
- Integration: Does the provider integrate with your accounting software (Xero, MYOB, QuickBooks)?
How Invoice Factoring Fees Work in Australia
Australian invoice factoring companies typically charge:
- A factoring rate of 1–5% per month on the invoice value
- A service fee for ledger management (often 0.1–0.5% of turnover)
- Potential minimum monthly charges regardless of usage
An Alternative Worth Considering: Fundtap
Fundtap is not a traditional factoring company — it is an on-demand invoice finance platform built specifically for Australian small businesses. Key differences:
- No customer notification — completely confidential
- No whole-ledger requirement — fund individual invoices
- No lock-in contracts or minimum volumes
- Funded within hours, not days
- Single transparent fee from 4%
- Integrates with Xero, MYOB, and QuickBooks
An invoice factoring company buys your outstanding invoices and advances you cash immediately. They then collect payment directly from your customers and charge a fee for the service.
Invoice factoring companies earn revenue through factoring fees (typically 1–5% of invoice value per month), service fees, and interest charges on advanced funds.
Traditional factoring companies do notify your customers. Confidential invoice financing providers like Fundtap do not — your customers pay you as normal.
Most traditional invoice factoring companies fund within 1–3 business days. Fundtap deposits funds within hours of invoice selection.
Many Australian factoring companies require a minimum annual turnover of $500K–$2M. Fundtap has no minimum turnover requirement.