Invoice Discounting

Receive payment for your invoices in no time and boost your business’ cashflow with invoice discounting. Compare your options with Savvy today.

Last updated on June 17th, 2022 at 04:30 pm by Thomas Perrotta

Compare business loans

Chasing up customers for payment can be a highly frustrating process. It’s important for businesses who find themselves in this position to know their options, which is where invoice discounting can come in handy. Find out more about invoice discounting and your other finance options here with Savvy.

site-logos OnDeck Business Loan
  Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee Annual Fee  
site-logos $10,000 $250,000 6 to 24
3% $0
Go to site

Lightning business loans up to $150K can be funded in as fast as 2 hours - simply provide 6 months of recent bank statements.

More details
site-logos Lumi Unsecured Business Loan
  Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee Annual Fee  
site-logos $5,000 $500,000 3 to 36
2.5% $0
Go to site

Boost your business with fast hassle-free funding from Lumi. Apply online in five minutes without harming your credit score and get funds in as quickly as 24 hours. For a limited time: Business Loans with No Repayments for the first 6 weeks. T&C apply.

More details
site-logos Lumi Lux Rate Reducing Business Loan
  Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee Annual Fee  
site-logos $200,000 $500,000 12 to 48
3.50% $0
Go to site

Lumi Lux™ is an innovative rate-reducing business loan that rewards customers with good repayment histories and no contractual breaches throughout their loan term by dropping interest rates by 25 basis points (0.25%) every six months

More details
site-logos Valiant Finance Business Loan Broker
  Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee Annual Fee  
site-logos $5,000 $1,000,000 3 to 60
$0 $0
Go to site

Valiant is Australia’s leading business loan broker with a network of over 80+ lenders. Apply for a business loan between $5,000 and $1 million and get approved in as little as 24 hours.

More details
site-logos ebroker Unsecured & Secured Business Loans
  Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee Annual Fee  
site-logos $5,000 $3,000,000 6 to 360
$0 $0
Enquire now

Compare, find and match fast to over 80 bank and non-bank lenders accessing much needed working capital from a unsecured business loan.

More details

Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.

You should always consult a given offer's PDS or further documentation in the process of deciding on which loan to choose, as well as seeking independent, professional advice. If you decide to apply with one of the lenders listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the lender offering that product.

Invoice discounting explained

Is invoice discounting different to invoice factoring?

Yes – while both invoice bill discounting and factoring fall under the umbrella of invoice finance, there are several key differences between the two of them which are important to consider.

Nature of finance

While discounting uses invoices as collateral for a line of credit, factoring involves you selling them to your financier, after which they pay you a portion of the owed amount and the rest upon client payment (minus fees). In this way, invoice factoring isn’t really a loan, as you’re simply receiving the money owed to you early and paying a premium for a third party to help you collect it.

Upfront payment

Invoice factoring will usually provide a larger upfront payment to the business of up to 95%, giving you more money to work with from the outset. While you’ll receive the full amount minus fees in either type of finance, this may be a more relevant consideration for you and your business if you desperately need the funds owed to you.

Level of involvement

Invoice discounting leaves the ball in your court when it comes to seeking out payment from clients, after which you submit your invoices for approval directly to your financier. However, with invoice factoring, your financier handles this process, saving you on time and stress but taking the control of debt collections out of your hands.


Because it’s a more hands-on process from start to finish, you could be charged more in fees for invoice factoring than discounting. Outsourcing the job of seeking out payment from owing customers will result in the cost of factoring increasing, with service fees (charged on each invoice), due diligence fees (covering administrative costs) and discount rate (percentage rate paid to financier) all applying. However, interest is a relevant concern for discounting, which isn’t really the case for factoring.


Invoice discounting is fully confidential, meaning your debtors won’t find out that you’re using it to boost your business’ cashflow. However, because factoring requires you to sell your invoices off to your financier and have them pursue payment with debtors directly, this type of finance isn’t confidential. This may affect existing relationships with clients, so you should be careful.

The pros and cons of invoice discounting


Boosting business cashflow

Your business can access the funds it’s owed before they’re paid, helping you avoid dips in available revenue due to a plethora of unpaid invoices.

Flexibility to draw at any time

With a line of credit, you can draw and redraw at your leisure, while you’ll only pay interest on the amount outstanding at any one time.

Keeping you in control

Your financier’s only responsibility is approving payment for invoices, leaving the debt collection process in your hands to conduct how you wish.

Cheaper than factoring

Because you’re doing the work yourself, the overall process may cost you less than opting for invoice factoring and outsourcing the debt collection work.


Less cash upfront

Although not much, invoice discounting gives you access to less money upfront, with a slightly smaller percentage of your invoice to be released from the outset.

Harder to qualify for

In general, because of the requirement for high cash turnover and robust internal accounting frameworks, it’s more difficult to access for small businesses.

More time-consuming

The other side of maintaining control of debt collection is that it places a time requirement on your business dedicated to chasing up customers.

Potentially high interest

If you leave a significant amount withdrawn on your credit line, it’s likely to accrue considerable interest if you can’t repay it quickly.

Common questions about invoice discounting

How long does it take to get approved for invoice discounting?

When setting up your invoice discounting arrangement with your financier, the entire process of submitting your application and proposal to being approved and opening your line of credit can take just 24 hours. This is another factor as to why businesses may seek out discounting, as it’s highly efficient and provides fast financial relief.

What types of businesses should use invoice discounting?

Because financiers will want to see that your business is capable of tracking its own debts and pursuing clients for payment effectively, it’s generally more suited to medium to large businesses. Small businesses often don’t have the structures in place to do this, so invoice factoring is a more common option for them.

Can I use invoice discounting if my clients are individual consumers?

No – invoice discounting is designed to take place for commercial transactions only, rather than businesses who send out invoices to the paying public. Instead, its intended purpose is to be used for business to business (B2B) dealings, such as supplying stock to a retailer.

Do I have to supply my full invoice ledger?

In most cases, yes – you’ll find that with almost all invoice discounting arrangements, you’ll be required to finance your entire invoice ledger. This isn’t the case with invoice factoring, which is able to be done with individual invoices instead. However, this type of factoring will likely cost you more to complete than doing so in bulk with your ledger.

Can I use non-recourse factoring for invoice discounting?

No – non-recourse factoring is a type of invoice factoring whereby the risk lies with your lender to collect the funds from your client. If your customer doesn’t pay, you’re not required to cover the cost or pay more fees. However, there isn’t an equivalent option offered for invoice discounting.

How long will my line of credit last?

Your line of credit is revolving, which means that, in many cases, it can run as long as you want it to and as long as it remains viable. If you’re able to keep it running steadily for ten years or more, your financier will more often than not allow you to do so.

Should I take out a business loan instead?

An unsecured business loan is another viable finance option for businesses, in which they receive a lump sum and repay it with interest over a set period as short as three months up to five years. While these come with lower borrowing ranges (maximum of $500,000), they’re a highly flexible and fast finance option for you. In this way, they’re a viable alternative to invoice finance funding. You can compare a range of unsecured small business loans right here with Savvy to help you find the best loan for your business’ needs.