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.