The Role Of An Invoice Discounting Broker
One of the key ways in which an established company can raise funds and improve cash flow is by using invoice discounting.
Unlike factoring which is more suited to start-up companies or ones in early stages of growth, invoice discounting tends to be used more by larger businesses with a sound client base and an established credit control and sales ledger system.
The way invoice discounting works is simple. A business comes to an agreement with an invoice discounting company that they will advance an agreed percentage of each invoice soon after it is issued, with the balance becoming payable when the customer themselves pay. In each instance the invoice discounter makes a charge for the service.
Unlike factoring, where the lender takes responsibility for getting payment from the customer, a business using invoice discounting continues to collect payment themselves. Payments are put into a trust account which has been set up in their name by the invoice discounter. This has the effect of making it a confidential procedure which remains hidden from the business’ customers.
The choice of the invoice discounter can be critical and this is where the involvement of an invoice discounting broker can make a big difference.
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What an invoice discounting broker does
Initially a broker will learn about the customers business, their clients and how they can to use the funding. Once the broker has a good understanding of the customers business they will introduce them to a few lenders who will in turn provide the customer with quotes.
Then it is the invoice discounting broker’s role to discuss and explain the relative benefits of the various options. The broker’s knowledge of the market and the individual invoice discounter’s areas of specialism means that they are in the ideal position to advise.
The benefits of using an invoice discounting broker
Searching made simple
There are a very wide number of invoice discounters available and to get quotes from even a few of them can be a very time-consuming business. However, by spending just a few minutes on the phone or online to an invoice discounting broker, a number of quotes can be obtained.
Inside knowledge
A broker like Touch Financial spends every day dealing with invoice discounters and knows all the individual companies’ strengths and benefits. We also are the first to know about any special rates or deals that might be available at the time
Make the right decision, first time
A invoice discounting broker will help to ensure that a business makes the right choice of discounter – a very important consideration given that mistakes can be expensive and time consuming to put right.
Touch Financial are perfectly placed to achieve this for your company while also offering five key benefits:
- Our service is FREE. Our income is derived from the commission we receive from invoice discounters for making successful introductions.
- Our advice is independent and impartial so we will only ever recommend the best options for your business.
- We work with over 20 of the UK’s leading lenders, including high street banks and specialist independent lenders.
- Our service is fast – we endeavour to return quotes to you on the same working day.
- We have access to exclusive offers and rates which are not available from any other broker.
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Also in this section:
- A factoring brokers role
- How to find the best deal from a broker factoring company
- The difference between broker factoring and going direct
- Considerations when selecting factoring companies
- Company factoring UK - Which lender is right for you?
- The role of an invoice discounting broker
