What Is Single Invoice Finance? Spot and Selective Explained
Business Owners
Spot factoring · Selective invoice finance · Notice of assignment
You do not have to hand over your whole debtor book to unlock one slow invoice. This guide covers how spot and selective invoice finance work, what they cost, which customers a funder will accept, what to check before you apply, what happens when your bank already holds security, what happens if your customer pays late and where to complain if something goes wrong.
Quick Answer
Single invoice finance lets an Australian business turn one unpaid business-to-business invoice, or a few invoices it chooses, into cash before the customer pays. The funder advances an agreed portion of the invoice and releases any remaining balance, less fees, when the customer pays. Unlike whole-ledger invoice finance, you choose which invoices to fund. Depending on the product, the arrangement may be disclosed to your customer or confidential. See how spot, selective and whole-ledger funding compare.
Also called: spot factoring, selective invoice finance, selective invoice discounting, single invoice factoring. Spot usually means a one-off invoice, selective usually means an ongoing facility where you choose which invoices to fund, and discounting is often used where you keep collecting from your customer.
What is single invoice finance, and how does funding one invoice work?
Single invoice finance is funding against one unpaid customer invoice, or a small set you pick, rather than automatically funding your whole accounts receivable ledger. The funder looks at the invoice, the customer and the contract behind it, pays you an agreed portion now, and settles the remaining balance less fees when the customer pays. You choose which invoice is funded, but you should still check the facility agreement and PPSR security scope because the funder's security may be wider than the individual invoice you choose to submit.
The sequence for one invoice runs like this:
- You submit an approved invoice. It must be for work already completed or goods already delivered, not for work still to come.
- The funder verifies the invoice. Under a disclosed product it may confirm the invoice directly with your customer. Under a confidential product it may use another verification method, such as accounting data, bank data or documents, so ask exactly what contact with the customer is required.
- If the product is disclosed, the customer is told where to pay. A notice of assignment can direct the customer to pay the funder. Confidential structures work differently, so check who collects the payment and what happens if the arrangement later becomes disclosed.
- The funder advances most of the invoice. The advance lands once the funder's verification, security and any required customer-notification steps are complete.
- The customer pays under the agreed collection structure. Under a disclosed product the customer usually pays the funder or a controlled account. Under a confidential product you may keep collecting, depending on the facility. The customer's contractual due date does not change just because you financed the invoice.
- The funder releases the balance, less its fees. What is left after the advance and the funder's charges comes back to you.
The legal basis for step 3 is the Personal Property Securities Act 2009, s 80 "Rights on transfer of account or chattel paper, rights of transferee and account debtor". Under subsection (7), your customer may keep paying you until it receives a notice that says the amount has been transferred, says payment is to be made to the funder and identifies the contract; under subsection (8), payment to the funder in line with that notice discharges your customer's debt to that extent (legislation.gov.au, Compilation No. 22, 14 October 2024, read 30 September 2026). How the notice applies to your contract is a question for your solicitor.
If you are ready to fund an invoice now, have the invoice, the contract or purchase order and proof of delivery in hand before you start. The broader product is defined in our invoice finance glossary entry.
What is the difference between spot factoring, selective invoice finance and selective discounting?
Spot factoring funds one invoice once, selective invoice finance is an ongoing facility where you choose which invoices to fund, and selective discounting usually means you keep collecting from your customer yourself. The government's small business site defines factoring as a factor company buying a business's outstanding invoices at a discount and chasing up the debtors, and invoice finance as finance based on the strength of a business's accounts receivable, similar to factoring except the invoices stay with the business (business.gov.au, Key financial terms, last updated 9 July 2024, read 30 September 2026; government glossary definitions, not advice).
How much of the invoice does the funder advance?
The funder advances most of the invoice's value up front and holds back the rest until your customer pays. One published example is Indigenous Business Australia, a government lender, which says its invoice finance lets a business request up to 80 per cent of the value of eligible invoices within 24 hours of IBA buying them (Indigenous Business Australia, Invoice finance, read 2 October 2026; one ledger product for Indigenous-owned businesses, not a market rate). The exact share is set per funder, customer and invoice, so compare the advance and the fees together rather than the advance alone: a higher advance with higher fees can leave you with less than a lower advance with lower fees.
How fast can one invoice be funded?
How fast one invoice is funded depends on the product and what still has to be completed. A first invoice can take longer because the funder may need to onboard your business, search existing PPSR registrations, approve the customer, review the underlying contract and complete any required verification, notice or bank-consent steps. Later invoices can be simpler once the facility and customer are already approved, but each invoice still has to fit the funder's eligibility rules. Having the invoice, contract or purchase order, proof of delivery or sign-off and aged receivables information ready removes delays you can control.
| Stage | What may still need to happen | Main cause of delay |
|---|---|---|
| First invoice with a new funder | Business onboarding, PPSR and existing-security review, customer approval, facility documents, contract checks and any required verification or notice | Missing documents, a slow customer response, or an existing bank or secured creditor that must consent |
| Later invoice under an established facility | Invoice eligibility, available customer limit and any verification required for that invoice | The invoice is outside policy, the customer limit is used up, or a dispute, credit note or ageing issue appears |
A labour-hire company has one large customer on 60-day terms and a payroll that falls well before that customer pays. It funds a single month-end invoice to cover wages. Under a disclosed arrangement, the customer receives a notice of assignment and pays under the funder's collection instructions; under a confidential arrangement, collection can work differently. When the customer pays, the funder releases the balance less its fee. The customer's credit did most of the work on the approval, as why your customer's credit matters explains, and the payroll pattern is walked through in one invoice on 60-day terms.
Illustrative only, no rate, advance or offer implied. Outcomes depend on the funder, the customer and your file.
How do spot, selective and whole-ledger invoice finance compare?
Spot, selective and whole-ledger invoice finance differ in how much of your ledger is funded and how long you are committed. Spot funds one invoice with no ongoing facility; selective is a facility under which you choose which invoices to fund; whole-ledger funds the debtor book, usually with a longer commitment. Many providers describe selective products with no lock-in as "flexible", but that is a product label, so read the contract rather than the brochure. For the full mechanics of the larger product, see how a whole-ledger facility works.
| Option | Which invoices are funded | Commitment | Is the customer told? |
|---|---|---|---|
| Spot (single invoice) | One invoice you choose, one time | No ongoing facility; the transaction ends when the funded invoice is settled | Often yes for disclosed spot products; confidential options also exist |
| Selective facility | The invoices you choose to submit, when you choose | Ongoing access; some products have no minimum usage, while others do | Depends on the product; disclosed and confidential structures exist |
| Whole-ledger factoring | The whole debtor book, or all invoices to agreed customers | Usually a standing facility with a contract term | Usually yes; the funder commonly manages collection |
| Whole-ledger invoice discounting | The whole debtor book | Usually a standing facility with a contract term | Often confidential; you commonly keep collecting |
| Option | How it is commonly priced | Usually suits | Main trade-off to check |
|---|---|---|---|
| Spot (single invoice) | A fee on that invoice, often affected by how long it stays unpaid | A one-off gap caused by one slow or large invoice | Per-invoice cost can be higher than a standing facility |
| Selective facility | Per-invoice fees, sometimes with an account or facility fee | Recurring but irregular gaps tied to selected customers | Check minimum usage, account fees and whether confidentiality can change |
| Whole-ledger factoring | Funding cost plus service fees across the ledger | A steady flow of invoices to many customers | You give up more control of collections and usually commit more of the ledger |
| Whole-ledger invoice discounting | Funding cost plus facility fees | Larger, established businesses with strong credit control | You keep collection responsibility and must meet facility controls |
Sources: business.gov.au, Key financial terms (factoring and invoice finance definitions), last updated 9 July 2024. Read 30 September 2026. The commitment, pricing and suitability columns are indicative, from our broking, and vary by funder.
A funder deciding what to fund reads your debtors customer by customer, and choosing invoices instead of the whole ledger changes what it reads.
Will your customer know you have financed their invoice?
Not always: traditional spot factoring and many selective invoice finance arrangements are disclosed, so the customer may be asked to verify the invoice and told where to pay. But selective and invoice-discounting products can also be confidential or undisclosed, where you keep the customer relationship and collection process. Ask the funder before you sign whether the product is disclosed, confidential from day one, or confidential only while you comply with the facility terms. The trade-offs are set out in whether a customer is told.
- What your customer is told on a disclosed product. Who to pay, the account details to pay into, and which invoice the notice covers.
- What does not change. Your payment terms, the work or goods supplied, and your relationship with the customer on everything else.
- How to raise a disclosed facility with a key customer. Tell the customer's accounts team before the notice lands, explain it is a cash flow tool, and give them a contact at your end so the verification call is not a surprise.
Can single invoice finance be confidential?
Yes, single invoice finance can be confidential: some Australian selective invoice finance and invoice discounting products can operate confidentially or on an undisclosed basis, while others are disclosed and require customer verification or a notice directing payment to the funder. Confidential does not mean the funder never has rights to contact the customer: read the contract for the events that can move collection from you to the funder. If keeping the arrangement private is important, ask the funder to state in writing who verifies the invoice, where the customer pays, and when direct customer contact can occur.
We are funding one of our invoices to you through an invoice finance provider. You will receive a notice of assignment from them asking you to pay that invoice into their account. The amount, the due date and the work are unchanged, and our other invoices are paid to us as usual. Their team may call to confirm the invoice. If anything looks wrong, please call me directly.
Adapt the wording to your relationship and send it before the notice arrives, so the first your customer hears of it is from you.
If you want to know whether a particular invoice is fundable before you raise it with anyone, check whether one invoice could be funded.
What does single invoice finance cost, and are there minimums?
Single invoice finance costs a discount or funding fee for the time the invoice is outstanding, plus any transaction or set-up fees, and some funders set a minimum invoice size. Per invoice, spot funding usually costs more than a whole-ledger facility, because the funder's verification and set-up work falls on one invoice instead of being spread across a ledger. The Small Business Ombudsman describes spot factoring and single invoice discounting the same way: you pick and choose which invoices to sell, often at a higher cost (ASBFEO, Supply Chain Finance Review position paper, February 2020, glossary, read 2 October 2026). There is no single reliable market rate for single-invoice finance because pricing changes with the customer, invoice age, advance, term and product structure. Individual providers publish their own prices, but one provider's advertised fee is not a market benchmark. Compare the offers you receive component by component and in dollars for the same invoice and the same number of days.
| Cost component | How it is usually charged | What drives it up | What to ask |
|---|---|---|---|
| Discount or funding fee | On the amount advanced, for the time the invoice is outstanding | Longer terms, a weaker customer, a smaller invoice | Is it charged per day, per week or as a flat fee per period? |
| Transaction or per-invoice fee | Each time an invoice is submitted or funded | Many small invoices rather than a few large ones | Is it charged on invoices submitted, or only on those funded? |
| Debtor verification or set-up | Once, when a customer or facility is first set up | New customers, overseas customers, complex contracts | Is it charged again for each new customer? |
| Account or facility fee (selective) | A regular fee for keeping a selective facility open | Facilities left open but rarely used | Is it payable in months when you fund nothing? |
| Minimum volume, lock-in or early exit fee | Mainly under whole-ledger contracts; some selective facilities also set a minimum | Longer terms and higher agreed volumes | Does any minimum, lock-in or exit fee apply to this spot or selective product? |
| Extension if your customer pays late | Extra fees for each period the invoice runs past its due date | Customers who routinely pay late | How is lateness charged, and when does recourse to you start? |
Basis: Indicative, from our broking, as at September 2026. Fee names and structures vary by funder; no rate or amount is implied.
How do you compare a per-invoice fee with an annual rate?
To compare a per-invoice fee with an annual rate, divide the total fees by the amount advanced, then multiply by 365 divided by the days the invoice was actually outstanding. The result is a rough annual equivalent you can set beside a loan or overdraft rate. The Small Business Ombudsman makes the same point about early payment discounts: the same 2% discount costs far more when it buys 30 days than when it buys 120, so the rate needs to be annualised before you compare (ASBFEO, Supply Chain Finance Review position paper, February 2020, read 2 October 2026). When you compare two funders, run the same invoice, the same amount and the same number of days through both offers, and include what each charges if your customer pays late. A worked version sits in turning a per-invoice fee into an annual cost, and the pricing term itself is explained under factor rate. If your invoices are small or infrequent, minimum sizes may rule some funders out, as small volumes and minimums covers.
Suppose a $20,000 invoice produces an 80% advance. You receive $16,000 initially and $4,000 is held back as the reserve. If the customer later pays the full $20,000 and the total funding fee is $600, the funder releases $3,400 of the reserve. Your business has then received $19,400 in total and the finance cost is $600. The $600 fee is 3.75% of the $16,000 cash advanced. If this made-up invoice was funded for 30 days, its simple annualised equivalent is about 45.6% (3.75% x 365 / 30), a figure for this example only and not a market rate. It does not mean you pay 45.6% of the invoice. It is a comparison tool for putting a short-period fee beside an overdraft or loan rate. Minimum fees, service charges, late-payment fees and different fee bases can make the real comparison higher or lower.
Illustrative arithmetic only, not a market rate or quote. Use the actual advance, total fees and actual funded days from each offer.
Does GST apply to invoice finance fees, and how is invoice finance treated in the accounts?
GST treatment depends on what each charge is for. The ATO says financial supplies, which include lending money and granting credit, are input-taxed sales that do not have GST in their price (ATO, Financial supplies, read 2 October 2026), and its ruling on securitisation also deals with debt factoring, treating the assignment of a payment stream as an input taxed supply (ATO, GSTR 2004/4, read 2 October 2026). A funder's fee schedule can still mix financing charges with separate service charges, so do not assume every line item has the same GST treatment; ask the funder for the tax invoice and have your accountant check it.
Accounting treatment also depends on the agreement, including whether the receivable has effectively been sold or the arrangement is financing secured against it, and who keeps the risk if the customer does not pay. A tax ruling's description of factoring does not decide how your financial statements present your particular facility. Give your accountant the signed facility agreement, fee schedule and settlement statements rather than trying to classify the arrangement from the product name alone.
Indicative, from Switchboard single-invoice and selective files, as at September 2026
What most often stalls a single-invoice file, in our broking, is not the business asking for the money but one of three things around the invoice:
- the customer will not acknowledge the invoice, or it cannot be verified
- the bank holds all-assets security and will not consent or subordinate
- the invoice is really a progress claim, or carries a retention
A selective or whole-ledger facility usually beats repeated spot funding when there is a steady run of invoices every month, and a line of credit is usually the better door when the gap is not tied to one invoice at all.
Not a quote, offer or approval likelihood. Funder appetite moves with the customer, the invoice and the market, and this block is re-dated at each review. Not financial advice.
Why does your customer's credit matter more than yours?
Your customer's credit matters more than yours because the funder is relying on your customer, not your business, to pay the invoice. It checks the customer's credit, the invoice and whether the invoice can be disputed; your own trading history still matters, but less than it would on a loan, as how trading history affects approval shows. Government and large corporate customers are usually easier to verify, though they are often on long terms. What a funder checks first is who owes the money and whether anything in your contract lets them pay less.
| Check | Why it matters | Common reasons an invoice is declined |
|---|---|---|
| Customer credit and payment history | The customer's payment is what repays the funder | Poor credit, a history of paying late, or no trading record to check |
| Business or government customer | Invoice finance works on invoices owed by businesses or government bodies on credit terms | Sales paid on the spot by consumers, or invoices to individuals |
| Share of your sales | A funder limits how much it will hold against one customer | One customer makes up most of your sales and the funder's limit is reached |
| Completed work or delivered goods | Only a debt already earned can be funded | Invoices raised in advance, deposits or work not yet signed off |
| Invoice not yet overdue | An older or overdue invoice can signal a payment problem before the funder takes it on | The invoice is outside the funder's permitted ageing policy, or too old for that product |
| Disputes, credit notes and contras | Under PPSA s 80(1), a funder that takes an invoice takes it subject to the terms of your contract with your customer and any defence or claim arising from it | A disputed invoice, open credit notes, or the customer also sells to you and can set amounts off |
| Retentions and progress claims | A claim can be reduced, certified late or held back under the contract | General funders often exclude or restrict them; specialist progress claim funders exist |
| Overseas customers | Verification and collection are harder across borders | The funder does not fund customers in that country, or cannot verify the customer |
| Government and large corporate customers | Usually easier to verify and lower credit risk | Long payment terms, or contract terms that restrict transfer of the invoice |
Sources: legislation.gov.au, Personal Property Securities Act 2009, s 80(1), Compilation No. 22, last updated 14 October 2024. Read 30 September 2026 (disputes row; how it applies to your contract is a question for your solicitor). The other rows are indicative, from our broking, and vary by funder.
Can you finance an invoice that is already overdue?
Sometimes, but the options narrow once an invoice is overdue. Many single-invoice funders prefer an invoice that is still within its agreed terms, while some selective products allow a limited period past the due date. A seriously overdue, disputed or repeatedly extended invoice is more likely to be treated as a collection problem than normal invoice finance. Ask the funder for its maximum invoice age measured from both the invoice date and the due date, because providers do not all measure ageing the same way.
What happens when one customer is most of your sales?
When one customer is most of your sales, the funder may cap how much it will hold against that customer, or look harder at the customer's credit. That is often where spot or selective funding helps rather than hurts: a funder can look at a spot or selective facility for one large customer on its own merits. For how funders size limits, see funding against your biggest customers, and for how the same issue reads on other products, customer concentration in a loan application.
What if your contract with the customer says you cannot assign the invoice?
A clause in your customer contract that bans assigning the invoice does not always stop you funding it. Under PPSA s 81, a contractual restriction generally does not prevent the transfer of the whole of an account that arises from selling inventory or from providing services in the ordinary course of business, though construction contracts and financial services contracts are excluded, and you can still be liable to your customer in damages for breaching the clause (PPS Guide, Other provisions relating to transfers of accounts, read 2 October 2026; commentary on PPSA s 81). Funders read these clauses before they fund, government and head contractor contracts often carry them, and whether one applies to your invoice is a question for your solicitor.
Who is single invoice finance for, and when is a whole-ledger facility better?
Single invoice finance suits a business whose cash gap comes from one invoice or a handful of customers, not from its whole sales cycle. When the gap comes from every sale every month, a whole-ledger facility or a different product usually fits better. If you are unsure which side you sit on, talk to us about invoice finance before you sign up to anything.
Often suits spot or selective
- One large customer on long terms
- Seasonal peaks
- Project or milestone invoices that are not progress claims
- A one-off large order
- Businesses that want to leave the rest of the ledger unencumbered
Often better on a whole ledger or another product
- A steady flow of many invoices every month
- Many small customers, or customers who pay on the spot
- Construction progress claims with retentions (specialist funders, or progress claim drawdowns for the drawdown side)
- Importers paying suppliers before they invoice (trade finance for importers)
- Very new businesses (a business loan declined on a new ABN)
Industry patterns differ. Builders and trades will find project invoices and progress claims closer to their situation, clinics billing insurers and agencies should read lumpy billing cycles, and haulage businesses a transport operator's slow docket. The wider set of options is on our finance hub for business owners.
An engineering subcontractor submits a milestone claim to a head contractor and asks a general invoice funder to advance against it. The funder refuses, because the claim is a progress claim carrying a retention and the head contractor can still certify it down. The route is a specialist progress claim funder, or a short working capital facility, weighed up in the alternatives when one slow payer is the problem.
Illustrative only. Whether a claim is fundable depends on the contract and the funder.
What should you check before you apply for single invoice finance?
Before you apply for single invoice finance, check whether your customer will pay early if asked, how that customer pays its other suppliers, whether your bank holds security over your receivables, and whether the invoice itself is clean enough to fund. Each check takes minutes, and each one either saves you the funding fee or stops a file stalling halfway.
- Ask your customer first. A customer may pay early for a small discount, pay part of the invoice now, or run an early payment program for suppliers. One call can cost less than any funding fee.
- Look up how your customer pays other small suppliers. If it is a large business, its reported payment terms and payment times may be public, as checking a large customer's payment record explains.
- Tell your bank before the funder asks. If your bank holds all-assets security, it will need to consent or sign a priority deed, and asking early avoids a stalled file; see what happens when your bank holds security.
- Check the invoice is clean. Completed work or delivered goods, owed by a business or government customer, undisputed, within the funder's permitted ageing policy and with no open credit notes, per what a funder checks.
- Gather your documents. The invoice, the contract or purchase order, proof of delivery or sign-off, and a recent aged receivables report; the full list is in what to have ready for a single-invoice application.
How can you check how a large customer pays its suppliers?
You can check how a large customer pays its small suppliers on the government's Payment Times Reports Register, which is free to search. Under the Payment Times Reporting Scheme, reporting entities, mostly large businesses and some government enterprises, report every 6 months on their payment terms and practices for small business suppliers, including their use of supply chain finance arrangements, and those reports are published on the public register (Payment Times Reporting Scheme, About the scheme, read 30 September 2026). You can search the Payment Times Reports Register by business name, ABN or ACN, see a snapshot of the entity's payment terms and payment times, and check its fast small business payer list (Payment Times Reporting Scheme, How to use the register, read 30 September 2026). That list, launched on 2 February 2026, recognises large businesses that consistently pay small business suppliers in 20 days or less and is published daily (Payment Times Reporting Regulator, Launch of the Fast Small Business Payer List, read 2 October 2026).
Only reporting entities appear, and the figures are averages across their small business suppliers, not a promise about your invoice. If your customer reports a supply chain finance arrangement, ask its accounts team whether you can use it: that is an early payment option that needs no funder of your own.
Is your customer's supply chain finance program a good deal?
A customer's supply chain finance program is usually a good deal when the customer already pays on terms of 30 days or less and joining is your choice, and a poor one when the customer has lengthened its terms and offers the program as the way back to being paid on time. That is the line the Small Business Ombudsman drew in its review: it called the product legitimate where suppliers choose it to get paid faster than good terms, and unacceptable where large businesses extend payment times and then offer it (ASBFEO, Supply Chain Finance Review position paper, February 2020, read 2 October 2026). The same paper notes that early payment under reverse factoring usually runs from when the customer approves the invoice, not when you issue it, which it put at a 5 to 15 day delay against traditional factoring, and that you may not get to choose the finance provider. Annualise the discount before you compare it with funding the invoice yourself.
What happens if your bank already holds security over your business?
If your bank holds security over all your business assets, an invoice funder will usually need the bank's consent or a deed of priority before it funds even one invoice, and it finds that security by searching the PPSR. That is because, where more than one secured party has a security interest in the same property, there are rules about who has priority, and the highest-priority secured party has the first right to enforce (PPSR, Which security interest has priority?, read 30 September 2026; a general description, not legal advice). An invoice is part of what a bank's general security agreement usually covers.
- The funder searches the PPSR against your business. It is looking for anyone already registered over your receivables.
- It finds existing registrations. Typically a bank's general security, and sometimes suppliers' retention of title.
- It asks for consent or a priority deed over the receivable. Your bank agrees that the funder ranks first on that invoice.
- It registers its own interest over the account. That registration protects its claim to the customer's payment.
How the wider product is secured is set out in how invoice finance is secured, and the order of events on a live file is in what happens between invoice upload, settlement and PPSR registration.
Why does a funder register on the PPSR for one invoice?
A funder registers on the PPSR for one invoice because, under the Personal Property Securities Act 2009, buying an invoice is itself a security interest. The PPSR's account class covers property in the form of an obligation to pay, such as book debts owed by customers for goods and services already provided (PPSR, Collateral type and class, read 30 September 2026; a description of a collateral class, not legal advice). Under PPSA s 12 "Meaning of security interest", subsection (3)(a), the interest of a transferee under a transfer of an account is a security interest whether or not the transaction secures payment, so a funder that buys an invoice registers it (Personal Property Securities Act 2009, Compilation No. 22, 14 October 2024, read 30 September 2026).
The register's own case study shows the pattern: a financier advancing against one invoice searches the PPSR first and registers its interest in the invoice (PPSR, Capital raising case study, read 30 September 2026). Under PPSA s 64 "Non-purchase money security interests in accounts", a financier that registers over an account for new value can rank ahead of a supplier's earlier purchase money security interest in that account as proceeds, if it registers first or gives the supplier notice at least 15 business days beforehand. Conditions apply, and whether they are met in your case is a question for your solicitor. The register is explained in our Personal Property Securities Register entry.
What is a deed of priority?
A deed of priority is an agreement between secured parties that sets which of them is paid first from particular property, here your bank and the invoice funder over the funded invoice. It changes the order between them without either releasing its security, and its terms are a question for your solicitor.
Do you need property security or a personal guarantee for single invoice finance?
Usually the receivable is the primary asset supporting invoice finance, so a residential or commercial property mortgage is not automatically required. That does not mean the facility is unsecured. The funder may register a security interest over receivables or other business assets, and some providers require director or personal guarantees. Ask for the exact security schedule before comparing offers: "no property security" and "no personal guarantee" are different claims. The PPSR treats debts and accounts as personal property that can support a registered security interest; land itself is generally outside the PPSR.
A seasonal wholesaler supplying a national retailer uses a selective facility only in its three peak months, funding the retailer's invoices rather than automatically drawing against the whole ledger, the pattern set out in how the three options compare and who single invoice finance suits. Its bank, which holds security for its overdraft, signs a priority deed over those receivables before the first invoice is funded.
Illustrative only. Whether a bank will sign a priority deed is up to the bank.
What should you check in the contract before you sign?
Before signing a single invoice finance contract, check which invoices you must offer, how long you are committed, what it costs to leave, and what happens if your customer pays late or disputes the invoice. Invoice finance for a company sits mostly outside the consumer credit laws: ASIC's guidance says loans to companies are not subject to the credit legislation, while loans to natural persons can be caught in some cases (ASIC, INFO 101, Does the credit legislation apply?, last updated 20 October 2020, read 30 September 2026; which law applies, not advice on entity choice). That is why the contract terms carry so much weight.
- Which invoices are covered. Whether you choose, or the funder can require every invoice to a customer.
- Minimum volume or term. Any commitment to fund a set amount or stay for a set period.
- Exit and termination fees. What leaving early costs, and how much notice is needed.
- Recourse if the customer does not pay. Whether you must buy the invoice back, and after how long, as what happens when a customer pays late sets out.
- Late-payment extension fees. What is charged once the invoice passes its due date.
- The security taken and any personal guarantee. Whether the funder takes security beyond the invoice.
- What the funder can tell your customer. Including whether it can contact the customer beyond the notice.
- Whether the funder is an AFCA member. A funder that only provides business finance does not have to be, which decides where you can complain if something goes wrong.
The small business unfair contract term protections still apply. They cover standard form small business contracts where a party employs fewer than 100 people or has turnover under $10 million, and, for financial products, where the upfront price payable does not exceed $5 million (ASIC, INFO 211, last updated 17 August 2026, read 30 September 2026; standard form contracts only, and a court decides whether a term is unfair). From 9 November 2023, unfair terms in those contracts became illegal, with each unfair term a separate contravention (ASIC, Unfair contract terms reforms commence, 9 November 2023, read 30 September 2026). Being outside the credit legislation does not put a funder outside this regime.
What should you do after the invoice is funded?
After funding, keep the customer payment path clean. Do not change the invoice, issue a credit note, agree a set-off or redirect payment without checking the facility terms, because any change to what the customer owes can affect what the funder expects to receive. Keep proof of any dispute or adjustment, watch the due date, and tell the funder early if the customer says payment will be late. If the customer pays you instead of the funder under a disclosed structure, do not treat it as spare cash; notify the funder and follow the facility's redirection process. On a disclosed facility, make sure the customer accounts team keeps the funder's payment instructions attached to the right invoice.
| What happens | What it can mean | What to do next |
|---|---|---|
| Customer pays late | Fees may continue and a recourse period may start running | Tell the funder early and check the late-payment and recourse clauses |
| Customer pays you by mistake | The money may belong in the funder's collection account under the facility terms | Do not treat it as spare cash; notify the funder and follow the redirection process |
| Customer pays only part | The reserve may stay held and a shortfall remains outstanding | Find out whether the short payment is timing, a deduction, set-off or dispute |
| You issue a credit note | The collectible invoice amount falls | Tell the funder before making the adjustment and update the ledger |
| Customer claims a set-off or contra | The net amount legally collectible may be lower than the face value | Provide the contract, account history and details of the cross-claim |
| Customer disputes the work or goods | Ordinary credit-risk protection may not cover a commercial dispute | Resolve the dispute and keep the funder informed before collections escalate |
| Customer becomes insolvent | The outcome depends on recourse wording and any non-recourse cover | Check the covered event, exclusions and who controls the proof-of-debt process |
| A progress or milestone claim is certified down | The enforceable debt may be less than the amount originally claimed | Get specialist assessment; ordinary invoice finance may not fit a claim with certification or retention risk |
What happens if your customer pays late or does not pay?
If your customer pays late, the funder usually charges extension fees for each extra period, and under a recourse arrangement you repay the advance or buy the invoice back if the customer still has not paid after the period set in the contract. Non-recourse cover is usually limited to the reasons the contract names, such as the customer becoming unable to pay, and not a dispute over your work. A dispute is the gap most owners miss: under either arrangement, a customer that refuses to pay because of the work usually lands back with you, which is why the funder checks for disputes before it funds. The Small Business Ombudsman's glossary puts recourse simply: if the customer does not pay, the business buys back the receivable and chases the bad debt itself (ASBFEO, Supply Chain Finance Review position paper, February 2020, read 2 October 2026). The terms of a factoring agreement are a question for your solicitor.
Where can you complain if an invoice funder treats you unfairly?
If you cannot resolve a complaint with the funder directly, you may be able to take it to the Australian Financial Complaints Authority, but only if the funder is an AFCA member. ASIC's guidance on commercial lending disputes says AFCA can resolve small business complaints about commercial lending, defines a small business for that purpose as fewer than 100 employees, and notes that lenders providing only commercial loans are not legally required to join AFCA, so you should check membership and get legal advice if the funder is not a member (ASIC, INFO 207, Disputes about commercial loans, reissued April 2024, read 2 October 2026). The same guidance says commercial borrowers still have general protections under the ASIC Act against unconscionable conduct, misleading or deceptive conduct and unfair terms in standard form small business contracts. Check AFCA membership before you sign, not after a dispute starts.
What are the alternatives when one slow payer is the problem?
If one invoice is the gap, the alternatives are asking the customer for earlier payment or a deposit, a line of credit, or a short working capital loan, and the right choice depends on why the gap exists and how often it recurs. Payment terms across the market are not getting longer: in Payment Times Reporting Scheme reporting cycle 10 (1 July to 31 December 2025), average common payment terms remained stable over three cycles at 29 days, with a 6.6 percentage point improvement since cycle 1 in the average proportion of invoices paid within 30 days (Payment Times Reporting Regulator, Regulator's update, August 2026, 24 August 2026, read 30 September 2026; large reporting businesses paying small business suppliers, averages, not any one customer). If one customer is materially slower than the rest of your debtor book, treat that customer's payment behaviour as a separate problem rather than assuming your whole business needs a permanent finance facility.
| Your situation | Usually try first | Why |
|---|---|---|
| A reliable customer on long terms, one-off gap | Spot or single invoice finance | The invoice is clean and the customer's credit carries the approval |
| A large customer on long terms | Ask about early payment or its supply chain finance program | It may cost less than a funder and needs no new security; check joining is optional and not tied to longer terms |
| The invoice is already overdue | Chase and collect the debt first | Many funders will not take an overdue invoice, while some products allow limited ageing past the due date |
| The customer disputes the invoice | Resolve the dispute | A disputed invoice is not fundable until it is settled |
| The gap comes back every month across many customers | A selective or whole-ledger facility, or a business line of credit | Repeated spot fees add up faster than a standing facility |
| You need cash before you can invoice | A short working capital loan or trade finance | There is no invoice yet to fund |
| An Indigenous-owned business with steady credit sales | Indigenous Business Australia invoice finance | A government lender's ledger facility; IBA lists at least 50 per cent Indigenous ownership, two years of profitable trading and $500,000 in annual credit sales |
| A construction progress claim with a retention | A specialist progress claim funder | General invoice funders often exclude progress claims |
Sources: Indigenous Business Australia, Invoice finance (eligibility in the IBA row), read 2 October 2026; ASBFEO, Supply Chain Finance Review position paper, February 2020 (supply chain finance row). The other rows are indicative, from our broking, as at September 2026, and the right fix depends on the customer, the invoice and your existing facilities.
The trade-offs are weighed in funding one invoice or taking a term loan and a line of credit instead.
Single invoice finance funds one invoice, or a few you choose, instead of automatically funding your whole debtor book. The funder relies heavily on your customer's credit and the invoice being genuine, earned, undisputed and within its permitted ageing policy. A disclosed product may involve customer verification and a notice of assignment; a confidential product can work differently. If your bank already holds all-assets security, the funder may need bank consent or a priority arrangement before funding can proceed. Before you apply, ask whether the customer can pay early, check the invoice and assignment terms, and find out what existing PPSR registrations need to be dealt with. Before you sign, compare the total dollar cost, recourse, security, guarantees, late-payment rules and complaint pathway rather than relying on one advertised fee.
Key takeaway: fund the one invoice that causes the gap, and only move to a whole-ledger facility when the gap comes from every sale.What else do business owners ask about single invoice finance?
Yes, you can finance just one invoice: spot or single invoice finance funds one invoice you choose, as long as it is for completed work or delivered goods, owed by a creditworthy business or government customer, undisputed and within the funder's permitted ageing period. Some funders set a minimum invoice size, so a small invoice may not qualify with every funder. See how funding one invoice works.
Selective invoice financing is a facility where you choose which invoices to fund, one at a time, instead of funding your whole debtor book. The funder verifies each invoice with your customer, advances most of it, and pays the balance less its fees when the customer pays. The wider product is defined in our invoice finance glossary entry.
Factoring on an invoice means a funder buys an unpaid invoice from your business at a discount and collects it from your customer. You get most of the invoice value now, and the rest, less fees, once your customer pays. See how funding one invoice works, step by step.
The two main types of factoring are recourse factoring, where you must repay or buy back an invoice your customer does not pay, and non-recourse factoring, where the funder carries the risk of your customer not paying for the reasons the contract names. Factoring is also split into disclosed and confidential, and into spot and whole-ledger. See recourse and non-recourse factoring explained.
If your customer pays late, the funder usually charges extension fees for each extra period. Under a recourse arrangement, if the customer still has not paid after the period set in the contract, you repay the advance or buy the invoice back. Non-recourse cover is usually limited to the reasons the contract names, such as the customer becoming unable to pay, not a dispute over your work. See what happens when a customer pays late.
A notice of assignment tells your customer the invoice has been transferred and that payment must now go to the funder. Under PPSA s 80(7), your customer may keep paying you until it receives a notice that identifies the contract and says to pay the funder; once it pays the funder under that notice, its debt is discharged. See what your customer is told.
Assignment of debt means transferring the right to be paid a debt, such as a customer invoice, from your business to someone else, here the funder. Under the PPSA a transfer of an invoice is treated as a security interest, which is why the funder registers it; see how a transferred invoice is registered.
You usually qualify through the invoice more than your business: an invoice for completed work or delivered goods, owed by a creditworthy business or government customer, within the funder's permitted ageing policy, with no unresolved dispute or set-off against it. Your trading history, concentration risk and any existing bank security also count. Run a quick eligibility check before you apply.
Invoice discounting carries a specific risk because you keep collecting from your customers: if you breach the facility terms, the funder can usually move to disclosed collection and contact your customers directly. That is a relationship risk as much as a cost one. Compare confidential and disclosed invoice finance before choosing.
Invoice factoring is not inherently predatory, but the contract decides whether it is fair to you, so check fees, minimums, exit terms and recourse. Unfair contract term protections cover standard form small business contracts where a party employs fewer than 100 people or has turnover under $10 million, and for financial products the upfront price payable does not exceed $5 million. See what to check before you sign.
It depends on the agreement, including whether the receivable has effectively been sold or the arrangement is financing secured against it and who keeps the risk if the customer does not pay. Give your accountant the signed facility agreement, fee schedule and settlement statements rather than classifying it from the product name alone. See GST and accounting treatment.
A deed of priority sets the order in which secured creditors are paid from the same property, such as your bank and an invoice funder. A deed of subordination is a creditor agreeing to rank behind another, often for an unsecured or related-party debt, and both are questions for your solicitor. See what a bank’s general security covers.
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