Invoice Discounting

Invoice Discounting is a form of Invoice Finance, similar to Invoice Factoring. It lets you and your business access funds due to you that are tied up in issued invoices. The major difference between Invoice Discounting and factoring is you keep control of collecting the payments. 

Your clients don’t know you are using this form of finance, so it’s completely confidential.

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What Is Invoice Discounting?

Also known as Confidential Invoice Discounting, it is a short term finance facility used by businesses who invoice their customers and clients for their services and products.

Lenders can quickly (within hours not weeks) give you a percentage of the value of the invoice right away. There’s no need to wait 30, 60 or 90 days for payment. 

Once the customer has paid the invoice, within the normal invoice terms, you receive the balance of the amount less the fees charged by the lender.

You can use the cash you release for any purpose. It is often used for cashflow to help pay bills and salaries. It can also be used to invest in the business to help grow your company.

Invoice Discount vs Invoice Factoring

The facilities are very similar with the main difference being the way the invoice payment is collected.

Smaller companies who don’t have a separate collection department would suit factoring. The lender takes over collecting the invoice, so the customer knows you are using finance.

For larger businesses with a dedicated credit control department, lenders will grant them Invoice Discounting facilities. It is a confidential form of finance, as the business will collect the payments as normal. 

Invoice Discount vs Invoice Factoring

The facilities are very similar with the main difference being the way the invoice payment is collected.

Smaller companies who don’t have a separate collection department would suit factoring. The lender takes over collecting the invoice, so the customer knows you are using finance.

For larger businesses with a dedicated credit control department, lenders will grant them Invoice Discounting facilities. It is a confidential form of finance, as the business will collect the payments as normal. 

Invoice Discounting is a form of business finance
Use Invoice Discounting to get quick access to cash.

How Does Invoice Discounting Work?

Invoice Discounting is a simple process.

Once you raise an invoice you send it to the lender who will advance you a percentage (often around (90%) of the value. 

After the customer has paid the invoice, into an account controlled by the lender, which will look like they are paying the business directly.  

The lender will then send your business the balance of the invoice minus the fees you have agreed with.

What Are The Benefits Of invoice Discounting?

Having access to the money you are owed before your customer pays obviously has some great advantages.

You could have the money in your account within hours, rather than waiting weeks or months.

  • Minimal paperwork
  • You stay in control of the customer and payments
  • It’s a confidential facility
  • Have a payment within 24 hours



Does My Business Qualify?

Invoice Discounting is available across many industries and businesses. 

Different lenders have variations on criteria but most will want you to have a specific payment collection department, otherwise you may be able to qualify for Invoice Factoring.

Your business will have to invoice most of your customers and your lender will probably want you to put all invoices through the facility. 

To discuss how we can help, call Tim on 01492 233 808.

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