Invoice Discounting Overview

Invoice Discounting is a similar service to Invoice Factoring, in that it gives you cash advances up-front based on your invoices. However it is aimed more towards larger established businesses, as it allows them to keep control of their sales ledger while still benefiting from increasing their working capital.

The Invoice Discounting company does not disclose to your customers that you are using the service, allowing you to keep greater control of your client relationships. The service can also be linked to lending against other assets, such as stock, machinery and property.

Benefits of Invoice Discounting

  • Up to 90% of an invoice value can be paid the next working day.
  • Invoice Discounting grows with your business, so there is no need to keep increasing your overdraft facility, or to re-negotiate it.
  • Ability to react quicker to market opportunities, whilst keeping your debtors under control.
  • With a number of lenders, you can minimise the risk of non-payment by purchasing optional credit protection.
  • You could obtain more favorable terms from suppliers by paying earlier.

How Invoice Discounting Works

Step 1. The Invoice Discounting provider will check your business processes, customers and finances.

Step 2. The Invoice Discounting provider will agree to pay you a percentage of your total outstanding sales ledger.

Step 3. Each month, money is either advanced by the lender or repaid to your business, depending on whether the total amount of your sales ledger has gone up or down.

Step 4. You pay the Discounter an agreed monthly fee and interest on the net amount advanced.

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