TL;DR: Invoice factoring is one way to fund unpaid invoices, but it's not the only option. This guide explains the differences between factoring, invoice finance, and invoice discounting.
Debtor factoring is another name for invoice factoring, a form of business finance where a company converts outstanding invoices into immediate cash by selling them to a third party. The terms are used interchangeably across Australia and New Zealand.
When a business raises invoices against its customers (debtors), it typically waits 30-90 days to receive payment. Debtor factoring accelerates this process by selling those invoices to a factoring company at a discount.
The factoring company provides immediate cash, usually 70-90% of the invoice value, and then collects payment from the business's customers directly.
Recourse factoring: If the customer fails to pay the invoice, the business must buy the invoice back from the factor. The business retains the credit risk. This is the most common type for SMEs.
Non-recourse factoring: The factor assumes the credit risk. If the customer does not pay, the factor absorbs the loss. This is more expensive and less common, typically reserved for businesses with very creditworthy debtors.
Traditional debtor factoring has several features that do not suit all businesses:
FundTap provides the cashflow benefit of debtor factoring without these restrictions. You select individual invoices to fund, there is no whole-ledger commitment. Your customers are never notified and continue to pay you directly. There are no long-term contracts.
Funds arrive within hours through direct integration with Xero, MYOB, or QuickBooks. For businesses that want the liquidity benefit of debtor factoring with more flexibility and less disruption to customer relationships, this is a meaningful alternative.
FundTap provides on-demand invoice finance for AU and NZ SMEs. Select an invoice and get funded within hours, no lock-in, fees of 4–6% per invoice.
Yes. FundTap serves businesses across both countries, integrating with Xero, MYOB, and QuickBooks.
Most businesses receive funds within hours. Once set up, funding is typically same-day.
Trusted by NZ & AU businesses
Fundtap has removed the stress and sleepless nights from running a trades business. Instant access to our money when we need it has repaired our cash flow and ensures our supplier bills are paid on time every time.SamOwner, electrical business
We love the convenience and accessibility of FundTap. It’s simple, which is really nice, and has enabled us to do things we wouldn’t otherwise have been able to do.Sarah HCo-Founder, YUM Foods
Great service with a professional team. FundTap does a great job at plugging the gap for small businesses and providing confidence to make decisions regarding business growth.Glenn De3 Scientific