Invoice financing is a type of commercial finance where your loan is secured against your business invoices. For example, if you run a transport business and have contracts with three different companies, you issue invoices after completing the transport runs. These invoices usually have payment terms of 30, 60, or 90 days, though sometimes it can take longer.

With invoice financing, you can submit these invoices to a lender. The lender will pay you 80% of the invoice amount upfront. The remaining 20% is paid to you once the company pays the invoice. There is a fee for this service.

The loan is secured only against the invoices, not any other property. Therefore, these loans are assessed differently. Businesses must show proof of work completion before receiving funds. This is a specialised product, and a commercial broker can help you navigate its complexities.