ScotPac New Zealand has been assisting small and medium sized enterprises (SME) access the business funding they need to succeed for over 35 years.

However, with both Invoice Finance and Business Loans as two finance solutions that allow for growth, better cash flow management and increased working capital access, it can be confusing to know which is right for your SME’s needs.

For a custom consultation regarding all things business funding NZ, reach out to our lending specialists today, or visit our Business Loans and Invoice Finance product pages.

What is Invoice Finance vs Business Loan?

What is Invoice Finance?

Invoice Finance allows NZ businesses to unlock funds tied up in the unpaid invoices owed to them by customers and clients.

This ensures quick access to working capital without having to wait the 30, 60 or even 120 days it takes for customers to pay.

With ScotPac, you can receive an advance of up to 85% of the invoices’ value in as little as 24 hours, with the rest (minus fees) provided once the invoices are paid.

Why choose Invoice Finance as your business funding solution?

  • There are no fixed repayments like with a loan
  • The approval process is quick and easy
  • Funds can be available in just one business day
  • You maintain flexible control over access to working capital
  • More SMEs can be eligible for access to Invoice Finance than bank loans
What is a Business Loan?

A business loan is a more traditional form of funding for SMEs.

It involves a standard loan of a lump sum of cash provided upfront and is often tied to use for a specific business purpose. These can include:

  • Investing in new assets
  • Expanding product lines
  • Buying stock & materials

Business loans are subject to regular repayments, with interest, according to a pre-agreed and fixed schedule throughout the loan term.

Why choose a loan for your business funding solution?

  • The fixed instalments are predictable and consistent
  • There are additional facility customisation options such as lines of credit and overdrafts
  • Business loans can be secured or unsecured depending on your needs

What are the pros and cons of Invoice Finance vs Loan?

What are the advantages of Invoice Finance?

Invoice Finance allows SMEs to:

  • More easily qualify for business funding
  • Avoid taking on business debt
  • Rapidly access funds to alleviate cash flow
What are the disadvantages of Invoice Finance?

However, Invoice Finance does have some aspects to consider:

  • The cost of fees for accessing the facility
  • Confidentiality may not be maintained depending on the type of Invoice Finance
  • It is dependent on the creditworthiness of your clients/customers
What are the advantages of Business Loans?

A business loan allows SMEs to:

  • Access larger sums of money
  • Benefit from better rates for secured loans
  • Ensure predictable repayments
What are the disadvantages of Business Loans?

However, Business Loans also have some aspects to consider:

  • Stricter eligibility criteria
  • Businesses will be increasing their debt
  • Potentially a longer application and approval processes

Which Business Funding option is right for you?

Does your business suffer from seasonal fluctuations in sales?

If the answer is yes, Invoice Finance may be the right funding solution for your business.

It allows for quick access to cash without the need to take on new debt to weather cyclical slow periods in sales.

Do you need business funding for a large purchase or expense?

If this is the case, a Business Loan may be preferable for your needs.

By providing a lump sum with predictable repayments, a loan may be more economical for investing in new equipment, vehicles or other assets.

Are you planning rapid business expansion or growth?

We recommend speaking to a lending specialist here at ScotPac NZ for tailored advice. Both options could be right for you, as Invoice Finance allows increased access working capital, while business loans can help fund major investments.

Are you a startup or lacking a strong credit history?

If this is your situation, we recommend Invoice Finance as the lending eligibility criteria is less strict.

Are your cash flow problems due to late-paying clients?

If unpaid invoices are affecting your cash flow, we recommend Invoice Finance. It allows you to access funding tied up in invoices without having to take on new debt.

Do you want to discover the best Business Funding solution to boost your cash flow?

ScotPac isn’t just the largest non-bank lender in New Zealand and Australia, we’re the current partner of over 9300 SMEs!

Our business funding solutions are designed to help fuel success and grow local businesses.

To find out more about the differences between Invoice Finance vs a Business Loan, enquire with our team today!

Business Funding Frequently Asked Questions

Is Invoice Finance the right option for all SMEs in NZ?

We recommend speaking to a ScotPac lending specialist for tailored advice. However, if you have a monthly turnover of $10,000 or more and reputable business clients or customers, Invoice Finance may be right for you. 

Which business funding solutions affect a balance sheet?

Invoice Finance does not create new debt as it provides an advance on existing but unpaid invoices. Business Loans, however, is a form of debt and will impact a balance sheet.

How quickly can businesses get funding?

Our online application processes mean that applying for funding can take as little as 5 minutes. Our team then assessing your application, often within one business day. 

For Invoice Finance, once approved, you can access funds within 24 hours.  

Will customers know if a business is using Invoice Finance?

There are different types of Invoice Finance depending on your accounts receivable and debt collection capabilities. If the collection of unpaid invoices remains with your company, you can maintain confidentiality with your clients. 

Which is easier to qualify for?

In general, as long as you operate in a business-to-business setting, Invoice Finance has less strict criteria than more traditional business loans. 

However, unlike Business Loans, Invoice Finance is more dependent on the creditworthiness of your customers/clients.