TL;DR: The cheapest way to fund unpaid invoices depends on how much you need, how often, and for how long. For a one-off gap, an overdraft may be cheapest. For ongoing working capital tied to invoices, on-demand invoice finance often costs less than it first looks, once you count the hidden costs of the alternatives.
The real cost of waiting for payment
The most overlooked cost is doing nothing. When cash is locked in unpaid invoices you may:
- Miss early-payment discounts from suppliers
- Delay hiring or turn down work you can't fund
- Pay late fees on your own bills
- Spend time chasing payment instead of running the business
Australian businesses routinely wait 30–90 days to be paid, the cost of that wait is real even though it never appears on an invoice.
Comparing your options
The cheapest option is the one that matches how you actually need to use it.
| Option | Typical cost | Pros | Cons |
|---|
| Business overdraft | 5–15% p.a. + annual facility fee ($200–$500+) | Flexible, instant within limit | Fixed limit, can be cut by the bank, may need security |
| Business loan | 6–25% p.a. depending on provider/security | Lump sum for a specific need | Creates debt, fixed repayments regardless of cash position, slow approval |
| Invoice factoring | 1–5% per month + service fees + possible minimums | No property security, collections handled | Customer notification, whole-ledger, lock-in |
| On-demand invoice finance (FundTap) | Single fee from 4% per invoice | No new debt, no lock-in, confidential, funded in hours | Only works if you have B2B invoices |
"People compare the headline percentage and stop there. The real question is what you pay across a year of actual use. A facility with no fees when you're not using it usually beats a cheaper-looking rate that bills you every month regardless."
Matt Peacey, Founder & CEO, FundTap
How to work out the true cost
Compare cost per dollar of funding, per day, not the headline rate. A 4% fee on a $10,000 invoice paid in 30 days is $400. Annualised that looks like roughly 48% p.a., but that framing is misleading, because:
- You only pay when you use it, there's no ongoing cost when you don't need funding
- There are no annual fees, setup fees, or minimums
- It doesn't consume your borrowing capacity with the banks
- The fee covers the whole service, no separate interest or admin charges
FundTap's average advance runs about $32K over roughly 33 days (FundTap data, 2026), so for most users the real cost is a single transparent fee on the invoices they actually choose to fund.
The bottom line
The cheapest option is the one that fits your actual pattern of need. For businesses with regular invoicing and slow-paying customers, on-demand invoice finance is often the most cost-effective once you account for flexibility, zero lock-in, and no debt impact. FundTap's selective model also keeps its loss rate at 0.71% (FundTap, BNZ presentation 2025), low risk for the business and its customers alike.
See how FundTap works → Rated 5★ on Google (117 reviews) · 4.9★ on the Xero App Marketplace (107 reviews).
Frequently asked questions
What is the cheapest way to fund unpaid invoices?
Is invoice finance cheaper than a business loan?
How much does it cost to fund a $10,000 invoice?
Why does invoice finance look expensive as an annual rate?
Are there hidden fees with invoice finance?
Does invoice finance affect my ability to borrow from the bank?
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