Understanding invoice discounting

Invoice discounting is a good option is you carry out in-house credit management processes and have good relationships with your customers. It is also a good idea if you want to keep our involvement confidential. Businesses looking for this facility usually need to have a higher turnover of around £500,000 plus. Otherwise, Invoice Factoring would be more suitable for a business looking to outsource their credit control and not have the confidentiality in place.

Invoice discounting can be both a short term and long term form of borrowing. The majority of businesses incorporate Invoice Discounting in to their standard business operations, with any associated costs factored into overall profit margins and view the facility as a longer term solution.

The difference between invoice discounting and invoice factoring is that with discounting, you retain control of the collection process and stay in contact with your customers directly, whereas with invoice factoring the business sells its invoices to a third party and then the factoring company chases the unpaid invoices and sends payment reminders directly.

Generally speaking, invoice discounting facilities are used to leverage cash from your entire ledger, which means you’ll forward every invoice to your lender, and then settle your debts as you collect from your clients.

Companies that are experiencing rapid growth can often benefit significantly from Invoice Discounting services. In order to maintain growth and expansion, a company will often require access to ready cash. In fact, companies experiencing rapid growth sometimes struggle to balance the cost of meeting unexpected demand, which can harm the business in the long run. Why not arrange a meeting with one of our advisors to find out if your business could benefit from invoice discounting?