Holding an unpaid invoice? Compare chasing, an early payment discount, funding one invoice or a facility for a due, overdue or disputed invoice.
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Cash Your Invoice · Unpaid Invoices · Invoice Finance
The job is finished, the invoice is out and the wages fall due before the customer pays. You have four routes to cash from here, and the invoice state decides which of them are open.
Quick Answer
You can cash your invoice four ways: chase the customer, offer an early payment discount, fund that one invoice, or open a facility over your accounts receivable. Which route is open depends on the invoice state: not yet due, overdue or contested. Only the last two use invoice finance.
Also called: early invoice payment, cashing in an invoice. A cash invoice is different: it records a sale paid on the spot.
What can you do with an unpaid invoice right now?
You can do four things with an unpaid invoice right now: chase it, discount it, fund it on its own or put it inside a facility. Two of those routes stay between you and the customer. The other two bring in a funder, and the invoice finance guide covers how that product works if it is new to you.
- Chase the customer. This costs time rather than margin, and it works when the customer can pay and is simply slow.
- Offer an early payment discount. This costs a slice of the invoice, and it only works if the customer has the cash and wants the saving.
- Fund that one invoice. Single invoice finance suits a one-off, such as a large job on long terms.
- Open a facility. A whole-ledger facility suits a business where slow payment is the normal pattern.
Two questions sit behind the choice. The first is the invoice state, which tells you which routes are open at all. The second is whether this is a one-off or a pattern, because one slow invoice needs a single fix, while customers who all pay late need a wider look at how your business is funded.
Is your invoice not yet due, overdue or disputed?
Your invoice sits in one of three states, and each state opens different routes. A not yet due invoice has all four routes open. An overdue invoice narrows them, because anyone funding it wants to know why it has not been paid. A contested invoice is the narrowest of the three: the dispute comes first, and funding usually waits.
| Route | Not yet due | Overdue | Disputed |
|---|---|---|---|
| Chase the customer | A friendly reminder before the due date is usually all it takes. | Your main route. Move from reminder to letter of demand. | Stop chasing the full amount. Find out what is disputed first. |
| Offer an early payment discount | The best fit, because there is still time to change when the customer pays. | Possible, though you are paying a customer who is already late. | Not a fix on its own. It may form part of an agreed outcome. |
| Fund that one invoice | Usually the cleanest invoice to fund, subject to the funder's read of the customer. | Harder. Funders tend to ask why it is late, and policy varies by funder. | Usually declined until the dispute is resolved, though policy varies by funder. |
| Open a facility | Worth a look if most of your invoices run this way. | Older invoices may fall outside the amount a facility will fund. | A disputed invoice is usually left out of the funded amount. |
The table is a starting point, not a rule, because funder policy varies. In practice, a funder reads your customer as closely as it reads you, so an overdue invoice from a strong payer can be a better prospect than a fresh invoice from a weak one. The way funders read a debtor book explains why.
What if the invoice is already funded?
If the invoice is already funded, speak to the funder before you send a demand, offer a discount or agree a credit. The funder has money riding on that invoice, so your agreement will usually say who chases it and who can change the amount. A dispute changes what the funder is owed, which is why it needs to hear about one early.
How do you get a customer to pay sooner without funding?
You get a customer to pay sooner by confirming what was agreed, then stepping up in order. Business.gov.au sets out the steps for an unpaid invoice (page dated 21 January 2026, read 2 November 2026), and they run like this:
- Check the contract. Confirm the payment terms, the amount and what was delivered.
- Send a reminder. Keep it short, and attach a copy of the tax invoice.
- Send a letter of demand. State the amount, the due date and what happens next.
- Try dispute resolution. Use this if the customer disagrees with the amount or the work.
- Use debt collection. This is the step where the commercial relationship usually ends.
- Take legal action. Weigh the cost against the debt, and take advice first.
The same page finishes with prevention, and that is where the lasting fix sits. In practice, check the simple faults before you escalate: the wrong purchase order number, the wrong entity on the invoice, or an invoice sitting in the wrong inbox. An accounts team can only pay what its system accepts.
Is an early payment discount cheaper than funding the invoice?
An early payment discount is cheaper than funding only when the dollars you give up are less than the funder's total charges for the same days. There is no universal answer, because it turns on the size of the discount, the days you bring forward and how the funder prices. So compare both on one invoice, in dollars, using these four points:
- What the discount costs. One amount off the invoice, paid once, and only if the customer accepts.
- What funding costs. Every charge until the customer pays, added up. How invoice finance fees add up shows the calculation.
- What lands in your account. A discount brings in the rest of the invoice in one payment. Funding usually pays an advance rate first and keeps a holdback amount until the customer pays.
- Who controls the timing. The customer decides on a discount. Once a funder has approved you, the decision to draw is yours.
A discount also has a GST side. In GSTR 2000/19, read 2 November 2026, the ATO says adjustment events include changes in consideration such as discounts (paragraph 11), and that a prompt payment discount is one made to encourage early payment of an amount owing (paragraph 20). Your accountant can tell you how that applies to your invoices.
Some large customers run their own early payment program. That is a different arrangement from a discount you offer yourself, so read about supply chain finance for small suppliers before you join one.
How fast can you cash an invoice, first time and after?
First funding typically takes longer than later funding, and the gap varies by funder. The first time through, a funder has to assess your business, check your customer, sign you up and usually register its interest on the Personal Property Securities Register. After that, each new invoice has far less to clear. Chasing and discounts run on the customer's timing rather than a funder's, so neither has a set speed.
What makes funding faster?
- A clean invoice matched to a purchase order
- A customer who confirms the amount quickly
- An up-to-date accounts receivable ledger
- A funder that has already set you up
What makes funding slower?
- First-time assessment and paperwork
- A lender already holding security over your assets
- A customer who is slow to confirm the invoice
- A part-paid, credited or contested invoice
Speed claims are worth testing before you sign anything, so work through the checks to run on a factoring company and ask how long the first invoice took for a business like yours.
Which route fits your invoice?
The route that fits comes from two answers: the invoice state, and whether the need repeats. A single invoice that is not yet due points to a discount, then funding. An overdue one points to chasing first. A contested one points to the dispute. Slow payment across the ledger points to a facility.
Select your scenario
Try a discount first, then fund that one invoice.
Offer the discount while there is still time for it to change when the customer pays. If the customer says no, or the dollars favour funding, a single invoice is the next route. Compare the two on the same invoice and the same days.
Discount, then one invoiceChase first, then ask whether a funder will take it.
Find out why it is late. If the customer confirms the amount and a payment date, a funder may still look at it, and policy varies by funder. If the customer goes quiet, keep working through the reminder and demand steps.
Chase, then test fundingResolve the dispute before you look at funding.
Work out what is disputed, and whether part of the invoice is agreed. A contested invoice is usually a problem for a funder, so treat this as a dispute first and a cash question second. Your solicitor is the right call before any demand goes out.
Dispute firstLook at a facility rather than one-off fixes.
When slow payment is the pattern, single fixes run out. A facility over your invoices can follow your sales, but it comes with more terms to read. Set it against tighter payment terms before you commit.
Facility worth testingA few situations change the answer. If the cash is for payroll, read funding wages against 60 day terms. If most of your invoices sit with one customer, a debtor concentration limit may cap what you can draw. If the facility route looks right, compare invoice finance provider types and decide on going through a broker or direct.
Sometimes the invoice is not the real problem. If cash is short for reasons beyond one late payer, working capital loans may be the better conversation. If you are weighing funding at all, read what borrowing against invoices actually means before you commit.
An unpaid invoice gives you four routes, and two of them need no funder. Start with the invoice state, because a not yet due invoice has every route open and a contested invoice has very few. Then price any discount against funding in dollars on the same invoice, and look at a facility only when slow payment is the pattern.
Key takeaway: Read the invoice state first, then compare a discount with funding in dollars before you sign anything.Frequently Asked Questions
A cash invoice means an invoice that records a sale paid on the spot, so nothing is left owing once it is issued. It is a different thing from cashing in an unpaid invoice, which means getting money for an invoice your customer has not paid yet. If the sale needs a tax invoice, your accountant can confirm what it must show.
You can get invoices paid faster, but payment is only instant when the customer pays at the point of sale. For an invoice already issued, the quickest routes are a direct call to the customer or an early payment discount. Funding can also bring the cash forward, although first funding typically takes longer than later funding. Before you fund, it helps to know how borrowing against invoices is structured.
You can resolve unpaid invoices by working through a set order: check the contract and payment terms, send a reminder, send a letter of demand, then move to dispute resolution, debt collection and legal action if you need to. Each step costs more than the one before it, so start at the top. Once the debt is contested, take advice from your solicitor before the next step.
An early payment discount is cheaper than invoice finance only when the dollars taken off the invoice are less than the funder's total charges for the same days. The discount is a single cost, while funding usually pays an advance rate up front and the balance later. Compare both in dollars on the same invoice, because a percentage on its own will not tell you which route costs less.
You can sometimes fund an invoice after sending a letter of demand, but raise it with the funder first. A letter of demand usually means the invoice is overdue or heading towards a dispute, and a contested invoice is usually a problem for a funder, though policy varies by funder. If the invoice is already funded, read the clauses in your agreement before anything goes out.
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