WFY’26: Australia’s invoice finance market reaches AUD95bn but remains underpenetrated

Australia’s invoice finance sector continued to expand in 2025, with estimated market volume reaching AUD95bn and active funding deployed to SMEs rising to around AUD7.5bn. In this country report, John Melocco, Executive Manager – Growth at Invoice Money, examines the forces shaping the market, from persistent SME liquidity pressures and tighter bank lending to rising credit risk, margin compression and changing industry structure.

The article included in the World Factoring Yearbook 2026 (WFY’26) explores why invoice finance continues to gain ground in Australia while remaining significantly less penetrated than in more mature markets such as the UK. It also considers the growing role of non-bank lenders, changing SME funding behaviour, regulatory pressures and the structural challenges facing specialist providers.

Below is an excerpt from his article.

The total volume of Australia’s invoice finance and factoring market in 2025 is estimated at AUD 95bn. That is 3.6 per cent higher than in 2024, when the estimated volume was AUD 91.7bn. This latest figure means that the invoice finance and factoring market represents about 3.4 per cent of GDP. With approximately AUD 7.5bn in active funding deployed to SMEs in 2025 compared with AUD 6.5bn in 2024, this sector reflects the continuing demand for flexible working capital solutions.

Despite this growth, the Australian market remains relatively underdeveloped by international standards. Invoice finance penetration is estimated at approximately 3.4 per cent of GDP, compared with around 10 per cent in the United Kingdom. This differential highlight both the growth potential of the Australian market and the structural factors that continue to influence its development.

Within this context, SME liquidity remains a central concern. Many businesses operate with limited cash reserves, and the persistence of delayed business-to-business payments continues to affect cash flow stability. In 2025, approximately 39 per cent of businesses reported longer settlement times, reflecting ongoing challenges in receivables realisation. Invoice finance addresses these conditions by enabling businesses to convert receivables into working capital more efficiently, thereby improving liquidity and supporting operational continuity.

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To read the whole article and 50 other specialist articles and country market reviews, order World Factoring Yearbook 2026 here.