What is the difference between Invoice Discounting and Invoice Factoring?

It’s time to cut through the jargon. Skipton Business Finance helps to explain the difference between the two main types of Invoice Finance, for those who are new to Invoice Finance.

At Skipton Business Finance, we’ve been supporting SMEs with our funding solutions for nearly two decades now.  

We’re proud of what we do. We live and breathe it. But that means we’re so used to talking about Invoice Finance, we forget that not everyone talks Invoice Finance.

So, we would like to help - with a bit of jargon busting!

Here’s a handy guide to the terms Invoice Discounting and Invoice Factoring.

What does Invoice Discounting mean?

Although it has ‘discount’ in name, it doesn’t mean funding with a discount (Sorry!).

It’s an industry standard term for a business funding facility that’s ideal for SMEs struggling with late payments from customers.

Think of it as a series of short-term loans with the provider using your invoices as security - rather than putting your assets at risk.

Rather than waiting 30, 60 or even 90 days for cash to come in from a client, your Invoice Discounting provider can lend you money.

This is normally a high percentage value of the invoice - around 85-90% of the amount.

It means that you can have cash at hand – or working capital, as we call it in the biz - to pay bills, pay staff, purchase materials, and invest in new equipment, etc.

Invoice Discounting also means that you can maintain control of payment collection (or credit control, as we call it) and maintain those sacred relationships you have with clients.

It’s ideal for larger SMEs with the resources to do this.

However, there is an option for smaller operations.

What does Invoice Factoring mean?

As well as providing funds - the same as Invoice Discounting does - this facility also offers your business with a professional credit control resource.  

This is ideal for smaller SMEs and sole traders who struggle to balance collecting payments with their day-to-day business delivery.

Credit Controllers are highly trained professionals. At Skipton Business Finance, we assign our clients with one of our friendly credit controllers who will work closely with you to establish a strategic credit control process for each unique client.

They work hard to build relationships with your clients, just like you have.

Many SMEs find it comforting to be supported by a team who will keep watch of their sales records, so they can focus on what they do best.

But some may prefer the support with an increased focus on client relationship building, which is where our unique My White Label solution comes in.

Wondering if Invoice Finance could boost your cashflow?

Then why not take a chance of FREE consultation with one of our regional experts.

Simply email info@skiptonbf.co.uk or use the form on the top right and one of our regional experts will call you back.

Part of the Skipton Building Society group, Skipton Business Finance supports SMEs across the whole of the UK from five regional centres in Bracknell, Birmingham, Manchester, Leeds and, of course, Skipton.

Our friendly teams across the UK can provide your business with working capital from as little as £25,000 to as large as £5m.

How The Application Process Works, The Skipton Way

When starting out in the consultation phase, your regional director will introduce you to the intricacies and benefits of Invoice Finance.

They’ll offer the time and expertise by understanding your unique issues and suggesting the ideal solutions that can solve your problems.

Compared to other forms of funding, Invoice Finance doesn’t have to be a waiting game. We’re quick to respond and actively involve you in the process. We guide you through the audit, paperwork, checks and more, making sure that you understand every step of the way.

If all runs smoothly you can have a facility in a matter of days.

And then, when you receive your inaugural payment, your dedicated Relationship Manager and Account Manager will be there for support and expertise with the day-to-day running of your facility.

And if you’ve chosen an Invoice Factoring facility, your highly-trained Credit Controller will work closely with you to develop effective credit control processes and establish productive relationships with your clients.

We do this because it’s The Skipton Way.

It may not be how others do this, but we and our loyal clients wouldn’t have it any other way.

Want to know more?

You’re always welcome to have a FREE consultation with one of our regional experts.

Simply email info@skiptonbf.co.uk or use the form on the top right and one of our regional experts will call you back.