Short Term Finance for AU & NZ Small Business: How It Works | FundTap

What counts as short term finance?

Short term finance is any funding facility designed to be used and repaid inside 12 months. For Australian and New Zealand small businesses, the practical options are:

• Invoice finance: funding against specific unpaid invoices, repaid automatically when your customer pays
• Business overdraft: a revolving credit line attached to your business bank account
• Business credit card: revolving credit with a monthly statement cycle
• Short term business loan: a fixed amount, repaid over 3 to 12 months with regular instalments
• Line of credit: revolving credit, drawn down as needed
• BNPL (buy now, pay later) for business: deferred payment on specific supplier invoices
• Trade finance: funding for imported goods, repaid when stock sells through

The boundary between short term and long term is not strict, but anything you expect to use and repay inside a year sits in this category.

Short term finance options compared

Each option suits a different cashflow gap. The table below compares the seven options on the variables that matter most for AU and NZ small businesses.

When invoice finance is the best fit

Invoice finance is the right choice when three things are true:

• You have unpaid invoices from credit-worthy customers. The funding is secured against the invoice, not your business, so a strong customer matters more than your credit history.
• You need the money soon. Same-business-day funding is the norm with FundTap. No bank application, no waiting weeks.
• You want to keep your balance sheet clean. Invoice finance is an advance against an existing asset (the invoice), not new debt.

It is particularly effective for industries with long payment terms: construction, staffing and recruitment, wholesale and distribution, professional services. See FundTap's industries hub for industry-specific examples.

When invoice finance is not the right answer

Invoice finance is not the right fit when:

• You do not have unpaid invoices. You are pre-revenue, or you trade on retail / cash terms.
• You need a fixed amount for a one-off investment (new vehicle, plant, equipment). A business loan or asset finance is usually a better fit.
• You need a permanent baseline credit line. An overdraft or line of credit is structured for ongoing fluctuation.
• Your customers are not credit-worthy. The funding is secured against the invoice payer, so this is the limiting factor.

How short term finance affects your balance sheet

Short term finance options divide into two categories on accounting treatment:

• New debt: overdraft, business loan, credit card, line of credit, trade finance. These appear as liabilities on your balance sheet.
• Advance against existing asset: invoice finance. The funded invoice converts from accounts receivable to cash, less the fee. No new liability.

This matters for: bank-loan covenants, future credit applications, and quarterly financial reporting. Many AU and NZ accountants now recommend invoice finance specifically because it keeps the balance sheet clean.

How to choose: a simple decision tree

1. Do you have unpaid invoices from credit-worthy customers? Yes → invoice finance is your lowest-friction option.
2. Do you need a fixed amount for a one-off investment? Yes → consider a short term business loan or asset finance.
3. Do you need permanent baseline credit for ongoing fluctuations? Yes → an overdraft or line of credit, if you can qualify.
4. Is the gap small and short (under a month)? Yes → a business credit card may be enough.
5. Is it about deferring payment on supplier invoices specifically? Yes → business BNPL.

For most AU and NZ small businesses with strong receivables, the decision tree lands on invoice finance. FundTap's pricing starts from 4% per invoice with no setup fees, no monthly fees, and no lock-ins.

Frequently asked questions

Short term finance is any funding facility designed to be used and repaid inside 12 months. The main options for AU and NZ small businesses are invoice finance, business overdrafts, short term business loans, credit cards, lines of credit, BNPL, and trade finance. Each suits a different cashflow gap.

Cost varies widely by product. Invoice finance with FundTap starts from 4% per invoice (a single transparent fee, no setup, no monthly fees). Business overdrafts run roughly 8 to 15 percent per year plus fees. Short term unsecured business loans typically have effective rates of 12 to 40 percent per year. The right comparison is not just the interest rate but the total cost over the time you actually use the money.

For SMEs with strong receivables, invoice finance is usually the cheapest option in total cost because you only pay when you use it and only on the specific invoice you fund. There are no monthly subscription fees, no setup fees, and no lock-ins. For SMEs that can qualify for a secured bank overdraft, the headline rate may be lower, but the total cost of maintaining the facility (annual fees, security requirements) often exceeds pay-as-you-go invoice finance.

Short term loans, overdrafts, and credit cards all add to your business debt profile and affect future loan applications. Invoice finance does not, because it is an advance against an existing asset rather than new debt. This is one reason accountants increasingly recommend invoice finance for clients who want to preserve credit capacity for larger investments.

Invoice finance is the fastest option for SMEs with unpaid invoices: connect Xero, MYOB, QuickBooks or Reckon to FundTap and you can have funds in your account the same business day. Short term business loans typically settle in 24 to 72 hours. Overdrafts and lines of credit usually take days to weeks because they need bank approval. Business credit cards take days to issue.