Invoice Finance Rates and Costs in New Zealand

One of the first questions any business owner asks about invoice finance is simple: what does it cost? The honest answer is that it depends on the model. This guide breaks down the rates and fees you will come across with invoice finance in New Zealand, and explains how the Fee Funders approach is structured.

What drives the cost of invoice finance?

With most traditional invoice finance and factoring facilities, the cost is made up of a few moving parts:

• Discount or service fee: a percentage of each invoice, usually charged to your business.
• Advance rate: how much of the invoice you receive upfront. A lower advance rate means more of your cash stays locked up until the client pays.
• Facility fees: setup, monthly minimums, and admin charges that apply whether or not you use the facility heavily.
• Term: the longer an invoice stays unpaid, the more interest or discount accrues.

Fees to watch for

Before you sign any invoice finance agreement, ask for the total cost in dollars on a typical invoice, not just the headline rate. Common charges that surprise people include monthly minimum fees, audit or due-diligence fees, early-termination fees, and recourse clauses that make you liable if a client does not pay. A low advertised rate can still be expensive once the fixed fees are added.

How the Fee Funders model is different

Fee Funders is built around a different idea: the business should not pay to be paid. Instead of charging your business a percentage of each invoice, the financing cost sits with the client who chooses to spread their payment.

• Cost to your business: nothing. No setup fee, no monthly fee, and no percentage taken from your invoice.
• What you receive: 100 percent of the invoice value, paid once the client's first instalment clears, typically within 7 to 10 days of approval.
• What the client pays: the client repays over 3, 6, 9, or 12 months at 2.33 percent per month (27.96 percent per annum), plus a one-off $240 setup fee.

So the cost is transparent, it is carried by the party choosing the convenience of paying over time, and your margin on the work stays whole.

A worked example

Say you invoice a client $6,000 for a completed project. With a traditional factoring facility advancing 85 percent at a 3 percent fee, you would receive $5,100 upfront, then the balance less fees later, and you would absorb the cost. With Fee Funders, you receive the full $6,000 once the client's first instalment clears, and your business pays nothing. The client repays the $6,000 in monthly instalments and covers the financing cost themselves.

Is it worth it?

For service businesses, receiving 100 percent of the invoice with no cost to you, while still offering clients the flexibility to pay over time, is hard to beat. You can see the full breakdown on our loan details page, compare models in our invoice factoring guide, or learn the basics on our invoice financing page.