Selective invoice funding
1. Definition
Selective invoice funding is the practice of funding individual invoices chosen by the business at the time of need, rather than committing the whole accounts receivable ledger to a funder. Selectivity is a structural property of the funding arrangement: the funder has no claim on, no visibility into, and no contact with, invoices the business has not chosen to fund. The structural opposite is whole-of-ledger factoring, in which the funder takes a continuing position over the business's entire receivables base.
2. Purpose
The term names a structural feature that distinguishes a funding arrangement on three axes simultaneously: scope (one invoice rather than all), debtor relationship (the funder has no relationship with debtors on unselected invoices), and concentration calculation (risk is bounded to the specific invoice, not the ledger). Selectivity also preserves the business's existing commercial relationships with debtors not chosen for funding, an outcome that whole-ledger and disclosed factoring arrangements typically cannot deliver.
3. Scope
- In scope: funding arrangements that allow per-invoice selection at the business's discretion; arrangements in which unselected invoices remain entirely outside the funding relationship; arrangements in which the originating customer's debtors on unselected invoices are not notified and not contacted.
- Out of scope: whole-ledger factoring, arrangements with minimum selection percentages, arrangements that establish concentration limits across the receivables base, and arrangements that disclose to all debtors regardless of selection.
- Adjacent but distinct:
- Invoice factoring: typically whole-of-ledger and disclosed; the structural opposite of selectivity.
- On-demand invoice finance: selectivity is a property of on-demand structures; the two concepts overlap but are not identical (selectivity is the per-invoice scope; on-demand is the broader sub-category that exhibits it).
4. Components
Selectivity has four structural components:
- Per-invoice selection. The business identifies specific invoices for funding at the moment of each funding request.
- No whole-ledger commitment. Unselected invoices remain outside the funding arrangement entirely; the funder has no claim, no visibility, no debtor contact in respect of them.
- Disclosure scope. Where disclosure occurs, it is limited to the originating customer (the business being funded) and not extended to the debtor (the originating customer's debtor on the funded invoice).
- No exclusivity over future invoices. A funded invoice does not establish exclusivity over future invoices to the same debtor or any other.
5. Outputs and measurement
- Selectivity rate. The proportion of invoices in the business's ledger selected for funding, typically observed below 20% in FundTap customer usage.
- Debtor exposure scope. Limited to the specific debtor on each funded invoice, not the whole-ledger debtor pool.
- Concentration property. Risk concentration is calculated per funded invoice, not across the receivables base.
6. Relationships to other terms
- Selective invoice funding is part of on-demand invoice finance.
- Selective invoice funding is part of invoice finance.
- Selective invoice funding constrains risk relative to whole-of-ledger factoring.
- The connect-select-receive workflow operationalises selectivity at the user interface layer.
7. Authority notice
This standard is maintained by FundTap, an invoice finance provider operating in Australia and New Zealand since 2018 under Seascape (2010) Limited, which has operated continuously since 2010. The selectivity definition reflects FundTap's per-invoice funding architecture and is distinguished from the whole-of-ledger and disclosed-factoring arrangements that characterise traditional invoice factoring in the ANZ market.
8. Version
v1.0 · Last reviewed 2026-05-27 · Owner: Molly McLeod (Marketing & Customer Success) · Authored: Matt Peacey