Deciding whether Invoice Factoring or Invoice Discounting is right for your New Zealand business will ultimately come down to your business goals, needs and preferences.

Whether you are establishing a startup or looking to grow an established company, Invoice Finance can help you effectively manage your cash flow. And cash flow is the critical lifeblood of small and medium sized enterprises (SME) throughout New Zealand and beyond.

How can you go about determining which is better for your business needs Invoice Factoring or Invoice Discounting? Let’s break it down to give you a hand.

What is the difference between Invoice Factoring vs Invoice Discounting?

Both Invoice Factoring and Invoice Discounting are types of Invoice Finance – which itself is a financial solution that allows companies to access an advance on the cash owed to them by their issued customers.

With no security required in the form of property or other assets, as the invoices themselves act as collateral, more SMEs in New Zealand can access the working capital they need when they need.

It is important to understand the different types of Invoice Finance to make the right decision for your business.

How does Invoice Factoring work for NZ businesses?

There are two main differences when it comes to Invoice Factoring:

1. Your business essentially sells the unpaid invoices to your finance provider.

2. The finance provider is the one who is responsible to collect the payment directly from your customer.

What are the benefits of Invoice Factoring? 

There are a few reasons why this form of Invoice Finance is advantageous.

  • Instant access to working capital to cover short term costs
  • Outsourced responsibility to handle collections
  • No need for property or other assets to serve as collateral
  • Scalable and customisable to suit your business growth

Who is Invoice Factoring best suited for? 

If you are an SME or a startup in New Zealand that doesn’t have a robust accounts receivable or debt collection department, Invoice Factoring offers the professional credit management support you need.

Want to speak to a lending specialist about whether Invoice Factoring is right for you? Contact ScotPac NZ today.

How does Invoice Discounting work for NZ businesses?

With Invoice Discounting in New Zealand, the facility operates slightly differently:

  • Your business still submits the unpaid invoices to your finance provider for funding.
  • Your business remains responsible to collect payment directly from your customer.

What are the benefits of Invoice Discounting? 

Invoice Discounting offers a number of advantages.

  • You can maintain complete confidentiality about your use of Invoice Finance
  • You can scale your funding in line with your sales ledger to facilitate growth
  • There are generally lower factoring fees due to retained control of debtors
  • No need for property or other assets to serve as collateral

Who is Invoice Discounting best suited for? 

If you are a more established SME and have your own internal accounts receivable department or debt collection team, Invoice Discounting can help you enjoy lower facility costs whilst enjoying improved cash flow management.

Want to explore how Invoice Factoring and Invoice Discounting New Zealand can fuel your success?

Did you know that…

  • ScotPac is the largest non-bank lender in New Zealand and Australia?
  • We currently support over 9,300 businesses and fund $26.3 billion in invoices annually?
  • We have over 35 years of experience and offices across NZ?

If you are ready to explore a funding facility that works with your business and meets your business goals, make sure to contact your nearest ScotPac office.

Our lending specialists will help you make the right call between Invoice Factoring and Invoice Discounting New Zealand.