Invoice funding allows businesses to access money from unpaid invoices before their customers pay. A funding provider advances a large portion of the invoice value - often up to 90 percent. When the customer pays the invoice, the advance is repaid to the provider along with a transparent fee, and the remaining balance goes back to the business.
For businesses that invoice customers on 30, 60 or 90 day terms, invoice funding provides faster access to money already earned.
Invoice funding is a type of business finance that allows companies to access money from unpaid invoices. Instead of waiting for customers to pay, a funding provider advances a percentage of the invoice value upfront and is repaid once the invoice is settled.
This helps businesses access working capital tied up in their accounts receivable.
Many businesses sell to other businesses on payment terms. While this is common, it can create a gap between completing the work and receiving payment.
For example, a business might:
During that time, the business still needs to cover expenses such as:
Invoice funding helps businesses access money already earned so they can continue operating and growing without waiting for payment terms.
Invoice funding follows a simple five step process.
Your business delivers goods or services and sends an invoice to your customer.
Example:
You issue an invoice for $10,000 with 30 day payment terms.
You submit the invoice to your funding provider.
Once approved, the invoice becomes eligible for funding.
After approval, you can access up to 90 percent of the invoice value quickly.
Example:
This allows your business to access most of the invoice value immediately instead of waiting for the payment terms.
Your customer pays the full invoice amount according to the agreed payment terms.
Example:
Once the invoice is paid, the advance is repaid to Fundtap along with the transparent funding fee.
Using the example:
This completes the funding cycle for that invoice.
Here is another simple example.
A transport company issues an invoice for $50,000 with 45 day payment terms.
Without funding, the business waits 45 days for the payment.
With invoice funding:
This allows the business to keep operating smoothly while waiting for payment.
Invoice funding is most commonly used by businesses that sell to other businesses on payment terms.
Industries that frequently use invoice funding include:
These businesses often generate strong sales but need faster access to the money tied up in unpaid invoices.
| Invoice Funding | Business Loan | |
|---|---|---|
| Based on | Unpaid invoices | Credit history and assets |
| Access to funds | Linked to invoices issued | Fixed loan amount |
| Repayments | Repaid when invoices are paid | Fixed repayments |
| Flexibility | Grows as your invoices grow | Fixed facility size |
Because funding is linked to real invoices, many businesses find it easier to access than traditional lending.
Invoice funding can be useful for businesses that:
It is particularly useful for businesses experiencing growth where larger contracts and longer payment terms can create pressure between invoices and payments.
Fundtap provides flexible invoice funding designed for small and growing businesses.
Businesses can connect their accounting software, submit invoices and access funding through a simple online platform.
Key features include:
This allows businesses to access money tied up in invoices and keep moving forward without waiting for payment terms.
Invoice funding and invoice factoring are similar but structured differently. Both allow businesses to access money from unpaid invoices. However, the structure of how invoices are managed and payments are collected can vary depending on the provider.
Many providers can approve invoices and release funding within 24 to 48 hours, depending on the business and the invoice.
This depends on the structure of the facility. Some arrangements are disclosed to customers while others operate in the background.
Invoices typically need to be issued to other businesses and have clear payment terms. Providers may also review the credit quality of the customer being invoiced.
Yes. Invoice funding is widely used by small and medium businesses that invoice customers on payment terms and want faster access to the money they have already earned.
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Fundtap helps businesses unlock funds from approved invoices quickly with simple, transparent funding.
Explore how invoice funding works with Fundtap and see how your business could access funding today.