What is Discounting? - 10 Phrases to Help Understand Invoice Discounting

Finding yourself tripping over Invoice Finance terminology and need a clear explanation? Don’t worry, Skipton Business Finance is here to help.

In the world of Invoice Finance we use lots of technical terminology when it comes to describing the process. But although the jargon maybe unusual, everything that it specifies will be very familiar to you.

We discussed the terminology of Invoice Factoring, so now we’re moving onto the other main type of Invoice Finance: Invoice Discounting.  

 

What does “Invoice Discounting” mean?

Sadly, it doesn’t mean you’re getting cheaper Invoice Finance. Unlike Invoice Factoring, with Invoice Discounting you maintain full control over your credit control and continue to collect your own payments from your customers. It works really well for SMEs who have capacity to chase up payments but need a working capital boost every now and again.

 

What does “Credit Control” mean?

Credit Control is like the art of getting paid on time. It’s everything your business does to ensure that the cash your customers (see debtors below) have promised to pay as a part of your service. Any kind of process e.g. follow up calls, keeping a diary, all counts as credit control.

 

What is “Confidential Invoice Discounting”?

A form of Invoice Finance, which advances cash against your unpaid invoices, but ensures that your customers are never made aware of the Invoice Finance providers involvement. At Skipton Business Finance we tailor this product and the service to the needs of your industry and to your unique needs as a business.

 

What is “Disclosed Invoice Discounting”?

An Invoice Finance arrangement similar to confidential invoice discounting - but without the confidentiality. You still collect the debt, but your customer is also aware that their debt has been assigned to an Invoice Discounting provider.

 

What does “Recourse Invoice Discounting” mean?

Recourse Invoice Discounting is when we will fund your invoices for a pre-determined amount of days past its due date. It adds an extra layer of reliability and consistency, so you can focus on other aspects of your business.

 

What do “Credit Terms” mean?

These are the payment terms that are given to customers and indicate when payment falls due. An example would be 30-day terms and these should be shown on invoices.

 

What are “Debtors”?

A specific term we use to refer to your customers. These are the parties that owe money to your business.

 

What does “Accounts Receivables” mean?

The technical term Invoice Financiers use to refer to the money your clients owe against the invoices that you’ve raised with your finance provider.

 

What does “BACS” stand for?

BACS stands for Bankers Automated Clearing System. It is the electronic payment system used to make payments and it takes approximately 3 working days to be cleared.

 

What doesCHAPS” stand for?

CHAPS stands for Clearing House Automated Payment System. It’s a much faster payment than BACS and guarantees same day payment, very handy if you’re strapped for cash. But beware that there is a small charge for this convenience.

 

Need help getting paid on time?

If you need an Invoice Discounting solution and access working capital from as little as £25,000 up to £5m, then look no further.

Backed by and sharing the ethos of Skipton Building Society, Skipton Business Finance look at the individual merits of a business as part of our underwriting criteria, not just their credit score.

If you would like a no-obligation FREE quote, please get in touch by ringing us on 0800 0854150 (or 0330 1232437 from mobile).

Or email us info@skiptonbf.co.uk.

Or why not utilise the handy form on the right and we'll call you back!