TL;DR: All three release cash from unpaid invoices, but differ on control and commitment. Factoring is disclosed and managed by the provider. Discounting is confidential but needs whole-ledger commitment and high turnover. On-demand invoice finance (FundTap) is confidential, selective, and has no lock-in.
| Feature | Invoice factoring | Invoice discounting | On-demand invoice finance |
|---|---|---|---|
| Confidential | No, customers notified | Yes | Yes |
| Who manages collections | Factoring company | You | You |
| Whole-ledger required | Usually yes | Usually yes | No, select individual invoices |
| Minimum turnover | Often required | Often $500K+ | No minimums |
| Lock-in contract | Typically 12–24 months | Typically 12–24 months | No lock-in |
| Speed of setup | 1–4 weeks | 2–4 weeks | Same day |
| Speed of funding | 1–3 business days | 1–3 business days | the same day |
| Best for | Outsourced collections | Larger firms with internal credit control | SMEs wanting flexibility and speed |
Invoice factoring means selling your invoices to a factoring company. They advance 70–90% of the invoice value, then collect directly from your customers, who are notified the debt has been assigned. Most factoring requires whole-ledger assignment and 12–24 month contracts.
Invoice discounting is a confidential facility where you borrow against outstanding invoices while keeping control of your sales ledger. You manage your own collections, but providers typically require minimum annual turnover ($500K+ ), whole-ledger assignment, and longer contracts.
On-demand invoice finance lets you fund individual invoices when you choose. There is no whole-ledger requirement, no minimum turnover, and no lock-in. FundTap operates this model: it is confidential, integrates with Xero, MYOB and QuickBooks, and funds the same day, the median time to a first fund is 3 days from sign-up (FundTap data, 2026).
"Whole-ledger facilities make you commit every invoice to get help with one. The selective model flips that, you fund the invoice that's causing the pinch and leave the rest alone. That control is the whole point for a small business."
Shane, Head of Growth, FundTap
Choose based on how much control you want to keep:
FundTap's selective approach also keeps risk low, and customers rate it 4.9★ on Google across 147 reviews.
All three turn an unpaid invoice into money now, but they work differently. Factoring usually means selling your invoices to a third party who then collects payment from your customers. Discounting leaves collection with you, but normally covers your whole sales ledger under an ongoing agreement. On-demand invoice finance, which is what FundTap does, lets you pick single invoices as you need them, with no lock-in and no minimum.
Is invoice factoring confidential?Often not. With traditional factoring the funder usually collects payment from your customers, so they find out. With FundTap your customers are never contacted and keep paying into your own bank account.
What's the difference between invoice finance and invoice discounting?Invoice discounting is one kind of invoice finance. It usually means an ongoing agreement across all your invoices, with you still collecting payment yourself. FundTap works invoice by invoice instead, so you choose what to fund and when.
Do I have to fund all my invoices?No. You choose which invoices to fund, one at a time. There is no minimum and no requirement to put your whole sales ledger through.
Which is cheapest, factoring, discounting, or on-demand finance?It depends on how much you fund and how often. Ongoing agreements often carry monthly fees and minimum volumes, so they can cost you in the months you do not need them. FundTap charges from 4% per invoice with no setup, monthly or exit fees, so occasional use costs you only when you use it.
How quickly can each option fund me?Traditional factoring and discounting usually involve a setup process that can run from days to weeks before the first payment arrives. With FundTap, once you are approved, funding is same day.