Invoice Discounting

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Invoice discounting is a form of invoice finance that allows businesses to use their accounts receivable (outstanding invoices) as collateral to access funds before the customers pay. Unlike traditional invoice factoring, where the finance provider takes control of the sales ledger and credit control, invoice discounting allows the business to maintain control over its own credit management and customer relationships.

how does invoice factoring work?

1. Invoice Generation: A business provides goods or services to its customers and issues invoices with payment terms.

2. Invoice Submission: The business submits these invoices (sales ledger) to an invoice discounting provider.

3. Funding Advance: *The invoice discounting provider advances a percentage (usually 70-90%) of the total invoice value to the business. This provides the business with immediate access to cash.

4. Collection by the Business: The business retains responsibility for collecting payments from its customers. The customers make payments directly to the business, not to the finance provider.

5. Repayment: Once the customer pays the invoice, the business repays the invoice discounting provider. The provider releases the remaining balance to the business, minus their fees and any interest charges.

Invoice Discounting vs. Invoice Factoring

With invoice discounting, the business continues to handle its own credit control and collections, while with factoring, these responsibilities are typically transferred to the finance provider.


• Businesses can maintain direct contact with their customers

• Credit control is managed in-house


• Fees and interest charges

Invoice discounting can be a flexible financing solution for businesses that want to maintain direct contact with their customers and have the capacity to manage credit control in-house.

It’s particularly suitable for businesses with strong credit control procedures and a reliable customer base. Keep in mind that the cost of invoice discounting includes fees and interest charges, so it’s essential to carefully review the terms and conditions of the agreement before choosing a provider.

Find out if you are eligible

Invoice discounting may be right for your business if you have:

• Robust credit control procedures

• A reliable customer-base

• Minimal bad debts

We are a professional body that can help you in securing a specific invoice discounting facility that works for you and your business. Fill out the enquiry form below to access on hand support from one of our funding specialists.

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