Payments on Demand vs Overdraft Facility
Which is the better cash-flow safety net?
An overdraft is a revolving credit limit attached to your business account: you draw on it when the balance runs low and pay interest on what’s drawn, plus fees on the limit itself. Marmalade Payments on Demand isn’t credit at all. It’s early payment on invoices you’ve already issued, priced per invoice and with no facility to maintain. This page compares the two so you can see which is the better fit for covering the gap between doing the work and getting paid.
Last updated: 25 August 2026
At a glance
Payments on Demand vs Overdraft Facility
A side-by-side view of how the two options compare on limits, cost, certainty and security.
| Feature | Payments on Demand | Overdraft Facility |
|---|---|---|
| Structure & limits | ||
| What it is | Early payment on invoices you have already issued | A revolving credit limit attached to your business account |
| Limit | No facility limit. Capacity grows with the invoices you issue | A fixed limit set at approval and reviewed periodically |
| Debt on balance sheet | No debt created | The drawn balance is a liability |
| Cost & risk | ||
| Cost when unused | Nothing | Line or facility fees typically apply on the limit |
| Cost when used | One fee per invoice cashed in, tiered by your customer’s payment risk (2.50%–4.99%) | Interest on the drawn balance, usually at a variable rate |
| Cost certainty | The fee is shown on each invoice before you confirm | A variable rate can move with the market |
| Non-payment risk | Non-recourse included at no extra cost. Marmalade carries the risk if your customer can’t pay | You remain liable for the drawn balance regardless of your own customers’ payment behaviour |
| Availability & security | ||
| Availability | On demand, on eligible invoices | On demand up to the limit, while the facility remains in place |
| Review and withdrawal | Not applicable | Facilities are usually repayable on demand and can be reduced or withdrawn at review |
| Security | Security on the invoices you cash-in only | Usually secured over business assets, often with directors’ guarantees |
| PPSR impact | No PPSR conflicts | Registrations can restrict other borrowing |
| Growth & getting started | ||
| Growth | Capacity scales as you invoice more | Increasing the limit requires a new application |
| Getting started | Connect your accounting platform, complete KYC and sign the agreement, with no credit application | Credit application and approval |
Illustrative comparison only, based on typical terms for businesses operating in Australia at the time of writing. Individual products vary by lender, amount and term. Check current terms and conditions before deciding.
Key differences
What is the main difference between Payments on Demand and an Overdraft Facility?
An overdraft is credit you keep on standby. You pay to have the limit available (usually a line or facility fee) and interest on whatever you draw, at a rate that can move. It sits over your business as security, and because it is typically repayable on demand it can be reduced or withdrawn at review, which is often when cash flow is already tight. Payments on Demand isn’t credit. It converts an asset you already hold (an unpaid invoice) into cash, at one flat fee on that invoice, shown before you confirm. There is no limit to maintain, no standby cost when you don’t use it, and nothing that can be pulled at a review.
Why marmalade?
Why choose Payments on Demand over an overdraft?
Nothing to pay when you don’t use it
An overdraft charges line or facility fees on the limit whether or not you draw on it. Payments on Demand costs nothing until you cash an invoice in. Unused capacity is free.
A known fee, not a variable rate
The fee on each invoice is shown before you confirm, so the cost is fixed at the point you decide. Overdraft interest is charged on the drawn balance at a rate that can move with the market.
Capacity that can’t be withdrawn at review
Overdrafts are usually repayable on demand and can be reduced or withdrawn when the facility is reviewed. Payments on Demand isn’t a facility. Capacity comes from the eligible invoices you have issued.
No debt and no directors’ guarantees
Nothing is borrowed, so nothing is added to your balance sheet as debt. Security sits against the invoices you cash-in rather than over all your business assets, and personal guarantees aren’t required.
Where an overdraft has the edge:
A buffer for any expense. An overdraft covers whatever the account has to pay, whether or not there is an invoice behind it. Payments on Demand is limited to the eligible invoices you have already issued, so it cannot help with a gap that appears when nothing is outstanding.
Automatic, and cheaper at high utilisation. Funds draw down as the balance runs low, with nothing to choose or confirm. And where the limit is drawn on consistently rather than occasionally, the line fee is spread across enough use that an overdraft rate can be the more competitive structure.
Compare on pricing
Payments on Demand pricing compared with an Overdraft Facility
One is priced per invoice; the other is priced on a limit, plus interest on what you draw. See the Payments on Demand pricing page for current fees.
Payments on Demand
You pay per invoice.
One fee per invoice cashed in, tiered by your customer’s payment risk (2.50%–4.99%), shown before you confirm
Nothing to pay when you don’t use it
No set-up, line or exit fees
No minimum volume and no lock-in contract
Overdraft Facility
You pay for the limit, drawn or not.
A line or facility fee charged on the limit, whether or not it is drawn
Interest on the drawn balance, usually at a variable rate
Establishment fees at set-up and fees at each review
Security over business assets and directors’ guarantees are commonly required
The facility can be reduced or withdrawn at review
The honest comparison depends on utilisation. If you draw on the limit consistently, an overdraft rate may be competitive; if the need is occasional, paying to keep an unused limit open is the more expensive structure. View the Terms & Conditions.
Which option should you choose?
Payments on Demand may suit your business if:
- Your cash-flow gap is caused by unpaid invoices rather than general expenses
- You use the buffer occasionally rather than continuously
- You don’t want to add debt or give directors’ guarantees
- You want a known fee at the point of decision rather than a variable rate
- You use Xero, MYOB or QuickBooks
- You want capacity that can’t be reduced or withdrawn at a facility review
An overdraft facility may suit your business if:
- You need a buffer for any expense, not just invoices already issued
- You draw on the limit consistently enough to justify the line fee
- You want funds to draw automatically as the account balance runs low
- You don’t reliably have eligible invoices outstanding when the gap appears
- You are comfortable with security over business assets and guarantees
Compare Payments on Demand, side by side
Weighing up other funding options or payment platforms? See how Payments on Demand compares to each.
Payments on Demand versus Invoice Finance
How cashing in individual invoices compares with a facility taken over your whole ledger.
See how it comparesPayments on Demand versus Loans
How on-demand funding stacks up against a fixed term loan.
See how it comparesFrequently Asked Questions
Have more questions? Get all the answers.
View all FAQsNo. It is not a credit facility. Payments on Demand is priced per invoice you have already issued, not a line of credit. There is no limit to maintain, no debt created and nothing to repay. Your customer settles the invoice as normal.
Neither is better for every business. Payments on Demand is stronger where the gap is caused by unpaid invoices, where cost is occasional, and where you want to avoid debt, guarantees and review risk. An overdraft is stronger as a general-purpose buffer that is drawn on consistently.
One fee applies to each invoice you cash in, tiered by your customer’s payment risk (2.50%–4.99%), shown before you confirm. Overdraft interest is charged on the drawn balance, usually at a variable rate that can move.
No. Unlike an overdraft, which typically charges line or facility fees on the limit whether or not it is drawn, Payments on Demand costs nothing until you cash in an invoice.
It isn’t a facility, so there is no limit to review, reduce or withdraw. Capacity comes from the eligible invoices you have issued, subject to eligibility at the time.
Have more questions? Get all the answers.
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A safety net you don’t pay to keep open.
Connect your accounting platform, choose the eligible invoices you want paid early, and pay one flat fee on those invoices only. No limit, no line fees, no debt.