Selective invoice discounting

Quick facts

Selective invoice discounting is a type of selective invoice finance, i.e. a way of borrowing money using your unpaid invoices. It’s similar to spot factoring in that it allows you to finance specific invoices (or customers). The key difference is that your customers are not usually aware you are using invoice discounting, whereas with factoring, the lender will take over credit control for your customers.

Selective invoice discounting, like spot factoring, allows you to unlock finance by selling specific unpaid invoices at a discount to a lender in return for a cash advance. You are not handing your entire sales ledger over to a lender ? as you would be with confidential invoice discounting or factoring).

This can be useful if you take large orders from one customer, but your other invoices are smaller or irregular. By using selective invoice finance you can get advances for your large invoices, leaving the smaller ones unaffected.

As with all types of invoice financing, your cash advance is a percentage of each invoice’s value. Once your customer has paid an invoice, the lender pays you the remaining balance minus their fee.

With both selective invoice discounting and spot factoring, the individual invoices you choose to finance don’t have to be from the same customer, you decide which ones you finance and which ones you choose to handle yourselves.

Unlike factoring, invoice discounting allows you to you keep control over your sales ledger and client relationships. It’s confidential.

How does selective invoice discounting work?

  • you decide which invoice(s) you want to finance
  • you send a copy of the invoice(s) to your lender (e.g. invoice discounting provider) for approval
  • the lender quotes you a fee (a percentage of the total invoice)
  • the lender gives you an advance payment (up to 95%) of the value of each invoice
  • after the customer pays an invoice the lender gives you the balance of that invoice minus their fee.

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Disclaimer: Swoop Finance Pty Ltd (ABN 52 644 513 333) helps Australian firms access business finance, working directly with firms and their trusted advisors. We are a credit broker and do not provide finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance Pty Ltd can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness, we may receive a commission or finder’s fee for effecting such introductions. Swoop Finance Pty Ltd does not provide any kind of advice and in giving you information about providers products, we are not making any suggestion or recommendation to you about a particular product. Offers of finance are subject to a separate assessment process by the provider and subject to their terms and conditions. If you feel you have a complaint, please read our complaints section which is contained within our terms and conditions.

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