Cheque vs. Invoice Financing (Bill.com, Ramp, etc.)


The cash flow challenge
For service businesses, the gap between completing work and getting paid can feel like crossing a desert with a leaky water bottle. You've earned the money - it's rightfully yours - but it's not in your bank account when you need it for payroll, vendors, or growth opportunities.

Many businesses turn to invoice financing to bridge this gap. But is that always the best solution? Let's compare traditional invoice financing (like Bill.com offers) with newer approaches like Cheque to see which might be right for your business.
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How invoice financing works

Traditional invoice financing allows you to get paid immediately for outstanding invoices, but for a price. Here's the typical process:

  • You complete work and invoice your client
  • The financing company advances you 70-90% of the invoice value
  • Your client eventually pays the full invoice to the financing company
  • You receive the remaining amount, minus fees and interest

It sounds straightforward, but there are important details to consider.
 
  • Monthly retainer installments
  • Phase-based billing for project work
  • Weekly billing for intensive work periods
This approach benefits both sides since your cash flow improves, and your client's finance team can process smaller invoices with less scrutiny.‍
 
The true cost of traditional invoice financing

When examining options like Bill.com's invoice financing, look beyond the advertised rates:Give clients a small but meaningful discount for paying ahead of schedule:Many vendors are willing to extend payment terms if you ask:

Hidden fees
 
  • Processing fees (often 1-2% per invoice)
  • Monthly minimum charges
  • Servicing fees for each invoice
  • Setup and integration costs
  • Steep interest rates if the client doesn't pay on time
 
Reduced control:
 
  • Your clients often pay the financing company directly
  • All invoices typically must go through their system
  • Minimum volume requirements may apply
Client perception:
   
  • Some clients view invoice factoring as a sign of financial weakness
  • Communication can become complicated with a third party involved
 
Long-term impact:
   
  • Average APR equivalent often reaches 24-36%
  • These costs compound over time and eat into margins
 
While invoice financing provides immediate cash, it's essentially an expensive loan that can create dependency and erode profitability.

 
The Cheque approach: Client-driven early payments

Cheque takes a fundamentally different approach to the cash flow challenge:

  • You invoice through Cheque with your preferred payment terms
  • Your client sees options to pay at different times with corresponding incentives
  • If they choose to pay early, you get the cash immediately
  • If they pay on normal terms, everything proceeds as usual
 
This model creates several distinct advantages:

Transparent pricing:
   
  • You determine what discount (if any) to offer for early payment.
  • No hidden fees, monthly minimums or interest rates if the client doesn't pay on time.
  • Predictable cost structure that you control
 
Maintained relationships:
   
  • Your client relationship remains direct and unmediated
  • Early payment is positioned as a win-win option, not a desperate move
  • Clients appreciate the flexibility they're given
 
Greater control:
   
  • You choose which invoices to offer early payment incentives on
  • No requirement to process all invoices through the system
  • No minimum volume requirements
 
Long-term sustainability:Greater control:
 
  • Typical effective APR equivalent of 12-18% (compared to 24-36%)
  • Creates a sustainable cash flow pattern rather than dependency
 
Cost comparison: A real-world example

Let's compare the costs for a business with $50,000 in monthly invoices wanting to reduce their cash flow gap by 20 days:

 
Traditional Invoice Financing (e.g., through Bill.com)
   
  • Advance rate: 80% ($40,000 immediate cash)
  • Monthly fee: 2.5% ($1,250)
  • Processing fees: 1% ($500)
  • Monthly maintenance: $100
  • Total monthly cost: $1,850 (4.6% of advanced amount)
  • Annual cost: $22,200
  • Effective APR: ~28%
 
Cheque Early Payment Approach
   
  • Early payment discount: 2.5% ($1,250)
  • Platform fee: 0.75% (included in discount)
  • Discount towards your client: 1.75% (Early payment discount minus the platform fee)
  • Processing fees: $0
  • Monthly maintenance: $0
  • Total monthly cost: $1,250 (2% of advanced amount)
  • Annual cost: $15,000
  • Effective APR: ~19%
 
In this example, Cheque costs 1/3 less while providing more flexibility and maintaining direct client relationships. Plus, the 1.75% discount goes to your client - not an invoice financing company.

 
Making the right choice for your business
The best approach depends on your specific situation:

Consider invoice financing if:

  • You need immediate cash for a one-time emergency
  • Client relationships are already distant or transactional
  • You're comfortable with higher costs for complete certainty
 
Consider Cheque if:

  • You want a sustainable, long-term cash flow solution
  • Client relationships matter to your business model
  • You prefer flexibility and control over your finances
 
Most businesses find that client-driven early payment systems like Cheque provide the best balance of immediate cash flow improvement, reasonable costs, and maintained client relationships.In this example, Cheque costs 1/3 less while providing more flexibility and maintaining direct client relationships. Plus, the 1.75% discount goes to your client - not an invoice financing company.

Try before you commit

The good news is that you don't have to overhaul your entire financial system at once. Cheque works alongside your existing invoicing platform, allowing you to test the approach with a few selected clients before making any big changes.

If you're curious whether this approach might work better than traditional invoice financing for your business, let's talk

Schedule your demo today →