When your cash flow starts to tighten, you don’t always need a big loan—you need a flexible, short-term solution to bridge the gap. That’s where invoice finance and business credit cards come into play. Both give you access to working capital, but they work very differently.
So, which is better for your business?
In this article, we break down the pros, cons, and ideal use cases for invoice finance and business credit cards to help you make an informed choice—especially if you’re an Australian business owner trying to keep operations running smoothly.
Table of Contents
- Understanding Cash Flow Challenges in Small Business
- What Is Invoice Finance?
- How Business Credit Cards Work
- Invoice Finance vs. Credit Cards: Key Comparisons
- Which One Is Right for Your Business?
- Final Thoughts & Finance Support
Understanding Cash Flow Challenges in Small Business
Cash flow issues often sneak up, especially for growing businesses. You’ve done the work, invoiced the client, but now you’re waiting 30, 60, or even 90 days to get paid—while bills and wages keep rolling in.
These kinds of delays can:
- Limit your ability to take on new jobs
- Force you to dip into savings
- Delay supplier payments or wages
- Cause unnecessary stress
This is where both invoice finance and business credit cards offer solutions—but they serve different needs.
What Is Invoice Finance?
Invoice finance, also known as invoice factoring or debtor finance, lets you unlock the value of your unpaid invoices.
How it works:
- You send an invoice to a client as usual
- A lender pays you a percentage upfront (often 80–90%)
- Once your client pays the invoice, the lender sends you the balance (minus fees)
Good for businesses that:
- Invoice other businesses (B2B)
- Have long payment terms
- Want funding tied to actual income
- Need ongoing cash flow support
Benefits:
- No need to wait weeks for customer payments
- Scales with your revenue—more invoices = more funding
- Doesn’t add to your debt balance
- Often easier to get than traditional loans
How Business Credit Cards Work
A business credit card offers revolving credit with a set limit, giving you fast access to funds when needed.
You can use it for:
- Buying stock or materials
- Paying suppliers
- Covering travel or online expenses
- Emergency purchases
Good for businesses that:
- Need small, short-term borrowing
- Want easy access to credit for day-to-day use
- Can repay quickly (within the interest-free window)
Benefits:
- Fast and easy access to funds
- Interest-free periods (usually 30–55 days)
- Builds business credit history
- Perks like points or cashback (depending on the card)
But remember—interest rates on business credit cards can be high, especially if you don’t repay in full each month.
Invoice Finance vs. Credit Cards: Key Comparisons
| Feature | Invoice Finance | Business Credit Card |
| Type of funding | Based on unpaid invoices | Revolving credit line |
| Best for | B2B businesses with slow-paying clients | Smaller, ad hoc business expenses |
| Repayment | Paid when customer pays invoice | Monthly, or interest accrues |
| Security | Often unsecured or tied to invoice | May require a personal guarantee |
| Access to funds | Based on value of invoices | Up to a set limit |
| Costs | Typically a fee per invoice | High interest if not repaid quickly |
Which One Is Right for Your Business?
Choose Invoice Finance if:
- You work on invoice terms and often wait weeks to get paid
- You need working capital tied directly to your revenue
- You want a funding model that scales with your growth
- You don’t want to take on new debt
Choose a Business Credit Card if:
- Your cash flow is mostly stable but you need flexibility
- You can pay off your balance within the interest-free period
- You make frequent small purchases or need to separate personal and business expenses
- You want access to loyalty rewards or expense tracking
Some businesses actually use both—invoice finance for core cash flow management, and a credit card for incidental purchases.
Final Thoughts & Finance Support
Both invoice finance and business credit cards can be valuable tools—but which one suits your business depends on how you earn, how your clients pay, and how you manage repayments.
If you’re not sure which option fits your business, a broker can help you look beyond the bank and find a solution that fits your cash flow, not just your credit file.
Ready to find the right working capital solution? Talk to Capital Plus Finance today and let us match you with funding that works for your business.
About Capital Plus Finance
Capital Plus Finance is a business finance and equipment finance broker based in Sydney, supporting Australian businesses across industries with smart funding solutions. With access to over 40 lenders, we help you choose the right finance for growth, cash flow, and everything in between.
