Compare finance types
Invoice finance vs Trade finance: which is right for your business?
The main difference between a invoice finance and a trade finance is how they are secured and repaid: a invoice finance suits b2b businesses with reliable customers on long payment terms, while a trade finance suits importers, wholesalers and distributors with proven sales and reliable suppliers.
Invoice finance vs Trade finance at a glance
| Invoice finance | Trade finance | |
|---|---|---|
| What it is | Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property. | Trade finance is a revolving facility that pays your suppliers for goods at the time of order and gives your business 60–180 days to repay, bridging the gap between paying for stock and being paid for it. It covers both imported and domestic purchases. |
| Amount | $20,000 – $5,000,000 | $50,000 – $5,000,000 |
| Term | 1–12 months | 2–6 months |
| Indicative rate | 8% – 18% p.a. | 9% – 20% p.a. |
| Rate type | Variable | Variable |
| Security | Secured by receivables | Secured by receivables |
| Repayments | Settled when the customer pays each invoice | Each drawdown repaid in full at the end of its term |
| Typical speed | 24–48 hours per invoice once set up | 1–3 weeks to establish, then 24–48 hours per drawdown |
| Best for | B2B businesses with reliable customers on long payment terms | Importers, wholesalers and distributors with proven sales and reliable suppliers |
| Consider the other if | Businesses that sell to consumers or are paid at the point of sale | Service businesses with no stock, or one-off purchases that do not justify a facility |
| Tax | Fees are generally a deductible business expense. | Interest and facility fees on trade borrowing are generally deductible. Confirm with your accountant. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a invoice finance
A invoice finance is usually the better fit for b2b businesses with reliable customers on long payment terms. Its main advantages are grows with your sales, no property security, can be confidential. Consider the alternative if businesses that sell to consumers or are paid at the point of sale.
When to choose a trade finance
A trade finance is usually the better fit for importers, wholesalers and distributors with proven sales and reliable suppliers. Its main advantages are pay suppliers upfront and often negotiate better pricing, revolving limit recycles with each repayment, works alongside invoice finance to cover the full cycle. Consider the alternative if service businesses with no stock, or one-off purchases that do not justify a facility.
Invoice finance
Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property.
Trade finance
Trade finance is a revolving facility that pays your suppliers for goods at the time of order and gives your business 60–180 days to repay, bridging the gap between paying for stock and being paid for it. It covers both imported and domestic purchases.