Invoice Discounting
Invoice discounting is a form of invoice finance where an invoice discounting company simply provides finance against the invoices that a client raises to their customers.
Effectively invoice discounting allows business owners to borrow a percentage of the invoice value secured by the collateral of the invoices or book debts. Invoice discounting companies will typically release up to 90% of the gross value of an invoice.
Typically invoice discounting facilities are confidential but in some circumstances it may be decided between the invoice discounting provider and the client that the facility will be disclosed in which case the clients customers will be aware of the invoice discounting providers involvement.
Invoice Discounting Criteria
The usual criteria for invoice discounting are:
- A business selling to other businesses.
- Invoices should be raised on credit terms
- Invoices should be raised in arrears of the product or service being delivered.
- There should be an audit trail proving that services or products have been delivered.
- The business should have suitable processes and resources in place to effectively conduct the credit control process.
Invoice Discounting Benefits
Invoice discounting can provide the following benefits if set up properly:
- Invoice discounting can release up to 90% of the gross value of your sales ledger and ongoing invoices.
- Invoice discounting allows a business to keep control of their sales ledger and credit control function.
- Invoice discounting can be confidential so that your customers are unaware of the involvement of the invoice discounting provider.
- Invoice discounting is typically cheaper than factoring.
Why not try our free online invoice factoring and invoice discounting quote form? In three easy steps you we can help fund you the right invoice finance solution for you and your business. Alternatively, give us a call on 0845 863 0738 and talk to one of our invoice finance experts.
