In short:
Yes. Single invoice finance lets you fund one invoice, or one client's invoices, without putting your whole ledger into a facility. The trade-off is a higher fee per invoice, and unless the deal is non-recourse, you still owe the lender if your client doesn't pay.
Key facts
- The lender is judging your client: How reliably your client pays counts for a lot, often as much as your own financials. An invoice to a large, established client is the easiest kind to fund.
- Only finished work: An invoice for work that's delivered and signed off can be funded. A retainer billed in advance, or a milestone your client hasn't accepted yet, usually can't.
- Your client may be told: In a disclosed deal your client pays the lender. In a confidential one they keep paying you. Single invoice deals are often disclosed.
- A full facility costs you in commitment: Putting your whole ledger in usually means lower fees per invoice, but it can bring ongoing fees, minimum volumes or a minimum facility size, depending on the lender.
Agencies and IT services firms know the pattern. You land a big client, do the work, send the invoice, and then wait on their payment terms while your team, your contractors and your software subscriptions keep billing you. Most of the time your cash flow is fine. It's the one big invoice from the one slow payer that pinches. You don't have to sign your whole ledger up to a facility to fix that. Here's how funding a single invoice, or one client, works, and what you give up in commitment and risk.
What single invoice finance is
Invoice finance turns money your clients owe you into cash now. A lender advances most of an unpaid invoice's value up front, holds back the rest, and settles up when your client pays, minus its fees. It isn't a niche product. business.gov.au's guide to choosing your funding lists invoice financing among the products banks offer, and describes factor companies as buying a business's outstanding invoices at a discount, then chasing up the debtors. It calls that a quick way to get cash that can be expensive compared with traditional finance, which is worth keeping in mind when you compare it with a loan or a line of credit.
Single invoice finance, also called spot or selective invoice finance, is the version where you pick the invoice. You fund the one you need to and leave the rest of your clients alone. Some lenders will also set up a facility for one client only, where every invoice to that client goes in and nobody else's does.
You'll also hear factoring and discounting. In factoring, the lender buys the invoice and collects it from your client. In discounting, you borrow against your invoices and keep collecting them yourself. Lenders use the names loosely, so ask two plain questions instead: who collects from my client, and will my client be told?
Single invoice, one client or the whole ledger
| Single invoice | One client's invoices | Whole ledger | |
|---|---|---|---|
| What goes in | The invoice you choose, when you choose | Every invoice to one named client | Every invoice to every client |
| What you sign up to | Each invoice is its own deal | A facility for that client | An ongoing facility, which can carry ongoing fees, minimum volumes or a set term |
| Price per invoice | Usually higher | Depends on the lender and the client | Usually lower |
| Suits | A one-off big invoice or a new client on long terms | One large client who always pays slowly | Most of your clients paying slowly, month after month |
Single invoice deals are usually priced as a fee on each invoice, and that fee can grow the longer your client takes to pay. Before you sign, ask the lender for the total cost in dollars on your invoice if your client pays on the due date, and again if they pay a month late. That number is easier to weigh up than a fee quoted as a percentage.
Recourse or non-recourse: who wears it if your client doesn't pay
This is the part of the deal that decides how much risk you're really getting rid of.
- Recourse: the risk stays with you. If your client doesn't pay, you repay the lender the money it advanced, plus its fees. It's usually the cheaper kind, and the easier one to get.
- Non-recourse: the lender takes on some of the risk of your client not paying, such as your client going under. It costs more, and lenders generally only offer it on invoices to clients with a solid credit record.
Non-recourse doesn't mean you can walk away from every unpaid invoice. It usually covers your client being unable to pay, not your client refusing to pay. If a client holds back payment because they say the site isn't finished, the project ran over scope or a deadline was missed, that's a dispute about the work, and it generally comes back to you either way. The same goes for an invoice that turns out to be wrong. Ask the lender for a written list of what non-recourse covers and what it doesn't.
Disclosed or confidential: will your client know?
In a disclosed deal, your client gets a notice telling them to pay the lender's account instead of yours, and the lender may contact them to confirm the invoice is real and the work is done. In a confidential deal, your client never hears about it and keeps paying you, and you pass the money on to the lender as agreed.
Single invoice deals are often disclosed, because the lender is relying on one client's payment and wants to confirm it with them. Confidential options exist, so ask, but expect the lender to want more from you, such as a longer trading history or a bigger spread of clients. If the deal is disclosed, give your contact at the client a heads up before the notice lands in their accounts team's inbox, so it reads as normal business and not a sign of trouble.
Worked example: a digital agency waiting on one big invoice
This is an example with round numbers, made up to show how the money moves. It isn't a real deal, a quote or any lender's terms.
| Example | Amount |
|---|---|
| Invoice for a finished, signed-off website build | $50,000 |
| Client's payment terms | 60 days |
| Advance from the lender when the invoice goes in | $40,000 |
| Lender's fees for the period | $1,500 |
| Paid to the agency once the client pays | $8,500 |
The deal is disclosed, so the client pays the full $50,000 into the lender's account on its usual terms. The lender keeps its $40,000 advance and its $1,500 in fees, and sends the agency the last $8,500. The agency ends up with $48,500 for a $50,000 invoice. The $1,500 is what it paid to have $40,000 in the bank two months early, covering payroll and contractors without touching the rest of its clients.
Now say the client went into administration before it paid. Under recourse, the agency owes the lender back the $40,000 plus fees. Under non-recourse that covers a client going under, the lender wears that loss. But if the client hadn't paid because it said the site wasn't finished, the agency would owe the money back under either kind.
What lenders look at on a single invoice
Each lender has its own list, but on one invoice it comes down to a few questions.
| What the lender needs to know | What it usually asks for |
|---|---|
| Is your client good for it? | Your client's name and ABN, and an aged receivables report showing how they've paid you before. Some lenders also check your client's credit record |
| Is the work done? | The invoice, plus the contract, statement of work or purchase order behind it, and your client's sign-off or acceptance of the deliverable |
| Can the money be passed on? | Your contract with the client. Some client contracts have a clause about assigning money owed under them, so show the lender the contract before you sign anything |
| Could the client take anything off? | Any credit notes, service credits under a service level agreement, or amounts the client could hold back or set off against what you owe them |
| Is it already spoken for? | Confirmation the invoice isn't already financed or offered as security to another lender |
| What about your business? | Your ABN, recent bank statements and enough to assess you, which depends on the lender and the amount |
Agency and IT invoices that usually do and don't qualify
What usually works:
- Time and materials invoices for hours already worked
- Milestone invoices after your client has accepted the milestone
- Monthly managed services or support billed in arrears, for the month just delivered
What usually doesn't:
- A retainer billed in advance for next month's work
- A deposit or upfront payment for a project that hasn't started
- A milestone invoice your client hasn't signed off
- An invoice to a related business, or to a client who is also your supplier and could set off what you owe them
- An invoice that's already in dispute or long overdue
When a single invoice is the wrong tool
Single invoice finance is built for the exception. If most of your clients pay slowly every month, the higher fee on each invoice adds up, and a whole-ledger facility or a business line of credit may cost you less over a year. And if you need money before you can invoice, at the start of a big project, invoice finance can't help, because there's no invoice yet. That's a job for a line of credit or a working capital loan.
Where EasyAsset comes in
Lenders don't all treat single invoices the same way. Some won't fund one invoice at all, some set a minimum invoice size, and they differ on which clients they'll accept, whether they'll go non-recourse and whether they'll keep it confidential. We work with 60+ lenders, so we can match the invoice and the client to a lender that suits them, and lay out the dollar cost, the recourse terms and whether your client will be told before you commit.
Waiting on a big invoice from one client? Get an invoice finance quote from EasyAsset here.
The broker's view
Most agency owners who ask me about invoice finance don't have a ledger problem. They've got one big client on long terms and payroll every fortnight, and for that I'd rather fund the one invoice than sign them up to a facility they'll keep paying for. The first thing I'll ask is whether the client has signed off the work, because the lender will ask the same thing.
Frequently asked questions
Can I finance just one invoice?
Yes. Single invoice finance, also called spot or selective invoice finance, funds one invoice you choose. Some lenders will also fund all of one client's invoices and leave your other clients out. Expect a higher fee per invoice than a whole-ledger facility, and checks on your client and the work behind the invoice.
Will my client know I've financed their invoice?
In a disclosed deal, yes. They're told to pay the lender, and the lender may contact them to confirm the invoice. In a confidential deal they keep paying you and never hear about it. Single invoice deals are often disclosed, so ask before you sign and give your contact a heads up.
What happens if my client doesn't pay?
With recourse, you repay the lender what it advanced, plus its fees. With non-recourse, the lender carries the loss if your client can't pay, within the terms it sets out. A dispute about the work usually still comes back to you under either kind.
Do I have to keep financing invoices once I start?
Not with a single invoice deal, because each invoice is its own decision. A whole-ledger facility is different. Read its terms for ongoing fees, minimum volumes and what it takes to leave before you sign.
Can I finance a retainer or a milestone before the work is done?
Usually not. Lenders want an invoice for work that's been delivered and accepted, because that's money your client owes you now. A retainer billed in advance, or a deposit for work that hasn't started, isn't backed by finished work yet.
Ready to buy? See Invoice finance for rates, terms and how to apply.
