Confidential Invoice Discounting

Also known simply as invoice discounting, confidential invoice discounting is a popular method for improving cash flow for UK businesses that have payments tied up in invoices with terms of 30 days or more. 

With this method of invoice finance, the process is confidential, which means no disclosure to your customers that you are financing your invoices. You also retain control of your sales ledger and send out your own reminders for payment.

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How does confidential invoice discounting work?

  1. Complete your work as you normally would to fulfil your customer’s order
  2. Raise your invoice as usual, and send it on to your customer
  3. Send a copy to your discounting partner. They will process it and verify with your customer
  4. Receive up to 90% of the invoice value, paid directly into your bank account within 24 hours
  5. Your customer pays into an account in your name. This is a trust account in your name that ensures complete confidentiality
  6. The discounting company will forward the balance to you less any prearranged fees

It’s important to get as much knowledge as possible when it comes to making decisions that impact your company finances. We’ve outlined the advantages and the disadvantages of invoice discounting so that you can make an informed choice.

Advantages of discounting

Disadvantages of discounting

How much does confidential invoice discounting cost?

The fees and costs involved with invoice discounting vary depending on your agreement with your financier. Invoice discounting is suitable for companies with a net turnover of £250,000 or more. If your turnover is lower than this, you might want to consider invoice factoring.

You are most likely to face a service fee (as a percentage of your turnover), and a discount fee, which is the cost of borrowing.

For a rough idea of rates, try our interactive invoice finance calculator.  The calculator is based on up-to-date real life data from Touch’s customers. It will give an indication of likely fees and overall costs.

Who is invoice discounting suitable for?

To enter into an invoice discounting agreement, you need to be a business-to-business (B2B) operation, selling to established businesses. You will need to be issuing invoices to your customers.

Confidential invoice discounting is suitable for businesses issuing invoices with payment terms longer than 30 days.

Invoice finance methods like these are used by over 40,000 UK companies throughout the UK. This kind of service can be used to raise funds from invoices that range from between a few hundred pounds to multiple millions, so it’s suitable for companies of all sizes, at virtually all stages of growth. However, because of its confidentiality element, invoice discounting tends to be the most logical option for larger businesses. 

Providers of invoice discounting all have different rules for the types of businesses they work with. However, most will expect you to have been trading at least 12 months. Most will also require you have a net turnover in excess of £250,000.

We help organisations from a wide range of sectors find the right invoice discounting service for their requirements, including:

Compare confidential invoice discounting options

Touch Financial is the UK’s largest invoice finance broker. We have access to a hand-picked panel of over 25 of the country’s top funders. 

We compare providers because we recognise that every business has different needs. Each sector is different, too, so it’s crucial that we find a provider that works within your industry. It’s the only way to ensure your invoice discounting company understands how you work, and what you really need. 

After a conversation with one of our expert consultants, we’ll match you with up to three providers who best suit your requirements. We won’t charge you anything for this service and you are under no obligation to buy from the facilities we recommend. 

When we compare invoice discounting funders on your behalf, we will look at a range of factors, including:

  • Your sector, business size and trading history
  • The size of your sales ledger, individual invoices and their frequency
  • Where in the UK you are located
  • Who your customers are
  • Any previous experience you have with invoice finance

 

Alternative services to invoice discounting

If the requirements for discounting don’t fit your business, there are other options available for funding. Invoice factoring is the most popular form of invoice finance with slightly different requirements yet many of the same benefits. Although factoring isn’t confidential in the same ways as discounting is, it’s a very effective method of improving your business’s cash flow.

For more control over the process, you can use a CHOCS facility on your factoring arrangement. This stands for ‘Client Handles Own Collections‘ and means that you deal directly with your customers rather than the funder doing so on your behalf.

Our Lenders

We have a panel of over 25 hand-picked funders and we are confident we will be able to help you in selecting the right one for your business needs.

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