Invoice Discounting

Invoice Discounting is a confidential way of financing your business by releasing funding against the value of your sales ledger whilst you continue to undertake your own credit control. The facility can also be run on a disclosed basis but most companies prefer for it to remain confidential meaning customers are unaware of the facility. It also allows you to continue working closely with your customers by doing your own collections whilst improving cash flow and can be used to fund acquisitions, support growth or even assist the financing of a management buy-out or buy-in.

Invoice Discounting works in a similar way to factoring; you invoice your customer and send a copy of the invoice or daybook listing to the Invoice Discounting company. On receipt of this up to 90% of the invoice value available for you to draw down as and when you need them.  You continue with your own collections and once paid, the remainder balance of the invoice is also made available for you to draw down as a payment. As with factoring, you can monitor your ledger and transactions via 24 hour internet access to your account. In recent years there are several providers that have further improved their online systems and developed a secure software package that interacts with the majority of standard accountancy software, reducing the administration involved in using the facility to a few clicks of the mouse.

The main benefit of invoice discounting in comparison to factoring is the ability to keep the facility confidential in addition to this it will usually cost less in comparison to factoring and is often more cost-effective when you are looking to fund a ledger with a large amount of customers and invoices to chase. In comparison with an overdraft invoice discounting is linked to your sales, as your business grows, your funding line grows with it.

In addition to your factoring facility it is possible to also take out Bad Debt Protection this quite simply safeguards you against potential losses incurred if one of your customers fails.

If you are looking for funding but also for assistance with credit control then you may want to consider Factoring as an alternative.

Our experienced team of dedicated advisors can let you know whether or not these products are appropriate for your business or if alternative sources of funds should be considered.

This appraisal is free of charge, contact us on 01451 832533

Back to top