Receivables Finance

Receivables finance is a form of business funding that allows eligible businesses to access cash tied up in unpaid customer invoices and accounts receivable. Instead of waiting 30, 60 or 90 days for customers to pay, you can access a portion of eligible receivables earlier and put that money back into your business.

Eligible accounts receivable are used to support a revolving finance facility. As your business issues invoices to approved customers, you may be able to access an agreed percentage of their value before payment is received. When customers pay, the facility balance and available funding adjust accordingly.

The terms are often used interchangeably. Both involve accessing working capital against eligible unpaid customer invoices. The exact structure varies between facilities, including how funding is calculated, how customer payments are handled and who manages collections.

Receivables finance and debtor finance generally describe very similar forms of funding. Both use eligible accounts receivable to provide working capital. Different providers may use different terminology or offer different structures, so it's important to compare the actual facility rather than the name alone.

The amount available depends on the value and quality of your eligible receivables, customer base, payment terms, turnover and facility structure. Your available funding can potentially increase as your eligible sales and accounts receivable grow.

Your facility limit generally depends on your eligible outstanding invoices, annual turnover, customer concentration, payment history and overall business circumstances. Businesses with larger, high-quality receivables ledgers may be able to access larger facilities.

Straightforward applications can often be assessed quickly once the required information has been supplied. Establishing a facility may involve reviewing your accounts receivable ledger, customers and financial information. Once established, it can provide ongoing access to working capital as eligible invoices are issued.

Pricing varies depending on your turnover, facility size, receivables ledger, customer quality and finance structure. Costs may include interest or funding charges on amounts drawn, along with administration, service, establishment or facility fees. We compare the overall cost and structure across suitable options.

Not necessarily. Receivables finance is generally supported by eligible business receivables rather than residential or commercial property. However, guarantees and other security arrangements may still apply depending on the facility.

Receivables finance is generally suited to businesses that provide goods or services to other businesses on credit terms and regularly have money outstanding in customer invoices. It can be particularly useful where long payment terms create a gap between making a sale and receiving the cash.

Potentially. Eligible sole traders, partnerships, companies and trusts may be able to access receivables finance. Eligibility depends on factors including your turnover, customer base, invoices, receivables ledger and overall business circumstances.

Potentially. Because the facility is linked to eligible receivables and customer quality, some newer businesses may qualify even without an extensive trading history. Your sales, customers, invoices and financial position will influence the options available.

Potentially. Previous credit issues don't automatically rule you out. Because the quality of your customers and receivables can also form an important part of the assessment, receivables finance may sometimes be available where traditional business lending is more difficult to obtain.

Potentially. Requirements vary depending on the size and structure of the facility. You may be asked for an aged receivables report, accounting records, business bank statements, customer information and other financial information rather than relying solely on traditional financial statements.

Generally, eligible receivables arise from goods or services that have already been supplied to acceptable business customers. The customer, payment terms, age of the invoice, industry and whether there are any disputes or conditions attached to payment can affect eligibility.

It depends. Receivables finance is generally designed around current eligible invoices rather than significantly overdue or disputed debts. Older receivables may be excluded from the amount available under the facility.

Not necessarily. Some facilities operate across most or all eligible accounts receivable, while others allow more selective funding. The available structure depends on your business and the facility provider.

It depends on the facility. Some arrangements can operate confidentially, while others require customers to make payments into a nominated account or may involve communication with the finance provider.

This depends on the facility. Your business may continue managing collections and customer relationships, while other structures may involve the finance provider managing some or all of the collection process.

It depends on the structure and whether the facility is recourse or non-recourse. Under many recourse arrangements, your business remains responsible for invoices that aren't paid. Some facilities may provide protection against certain customer defaults, subject to conditions, limits and exclusions.

With recourse finance, your business generally remains responsible if a customer doesn't pay an eligible invoice. With non-recourse finance, the provider may assume or insure against certain customer default risks, subject to the specific terms, limits and exclusions of the facility.

Both provide funding against accounts receivable. Factoring may include customer collection and debtor-management services, while some receivables finance facilities allow your business to retain more control over collections. The exact distinction depends on the structure of the facility.

A traditional business loan generally provides an agreed amount that is repaid according to a set structure. Receivables finance is linked to eligible money owed by customers, meaning the funding available can potentially rise and fall with your receivables ledger.

A business line of credit provides access to an approved limit based on your overall business and financial position. Receivables finance bases available funding more directly on eligible accounts receivable, so the amount available can grow alongside qualifying sales.

Yes. The purpose of receivables finance is to reduce the cash-flow gap between issuing an invoice and receiving payment, giving your business earlier access to money that would otherwise remain tied up in outstanding receivables.

Funds can generally be used for legitimate business purposes, including wages, supplier payments, inventory, operating expenses, tax obligations, equipment, new contracts and business growth.

Yes. By accessing cash from eligible receivables earlier, your business can use the funds to meet payroll, pay suppliers and cover other operating expenses without waiting for customers to settle their invoices.

Yes. Because available funding can increase as eligible sales and receivables grow, receivables finance can help businesses purchase additional stock, hire staff, accept larger orders or take on new contracts without putting as much pressure on working capital.

Yes. Businesses with seasonal revenue or fluctuating payment cycles can use receivables finance to access cash from eligible invoices earlier and help manage operating expenses between customer payments.

Receivables finance is generally an ongoing working capital facility rather than a one-off loan. Your business can continue accessing funding against eligible receivables while the facility remains in place, subject to its approved limit, terms and ongoing requirements.

Requirements vary, but you may need an aged receivables report, customer information, invoices, accounting records, business bank statements, financial information and your ABN or company details. Larger or more complex facilities may require additional documentation.

Getting an initial quote with Overdrive does not require an upfront credit check. We can assess your requirements and compare suitable options before progressing to a formal application. If you decide to proceed, the selected lender may conduct credit enquiries as part of its assessment.

Receivables finance can be particularly useful if your business sells to other businesses on credit terms and regularly has significant working capital tied up in unpaid invoices. It may be less suitable for businesses that primarily sell directly to consumers or receive payment immediately.