Is Invoice Discounting right for my business?

Larger, more established companies with Credit Control teams are more likely to look at Invoice Discounting as the preferred invoice finance option to better manage cashflow.

Invoice Discounting allows you to maximise the value of your sales ledger. The way it works is that as you issue an invoice to your customer and send a summary of your sales to your Invoice Finance provider, an agreed proportion of that invoice becomes available to you usually within 24 hours.

Choosing Invoice Discounting means you retain control of your customer relationships. They will not know that you are working with an Invoice Finance partner.

You retain control of the sales ledger through your credit control team – you send out invoices, collect payments and issue reminders. You also have to chase late payments.

How does invoice discounting work on a daily basis?

The agreement you have with your Invoice Finance provider dictates the percentage of the invoice you will receive. The invoice finance provider will release the agreed funds to you, usually within 24 hours of raising an invoice, meaning you have certainty over your monthly cashflow. When you receive payment from your customer you repay your provider, minus any agreed fees.

You will receive up to 100 per cent of the invoice value from your provider with 24 hours of raising an invoice, but as soon as you receive payment from your customer you repay your provider, minus any agreed fees

Is Invoice Discounting right for me?

Invoice Discounting works for businesses that:

• Have a robust credit control team
• Have minimal bad debts and minimal late payments
• Invoices are issued with a minimum 30 day payment term
• Meet turnover levels required by the lender

It’s important to remember that Invoice Discounting is available to more established businesses and that you have your own internal Credit Control team.

Newer businesses or start-ups might not have the turnover required or the Credit Control experience for Invoice Discounting to work, so Invoice Factoring will be the better option.