Invoice Discounting from Skipton Business Finance
Invoice discounting is the practice implemented for using a company’s due accounts received as collateral for a loan purpose. Invoice Discounting is similar to Invoice Factoring.The core concepts of Invoice Discounting and Factoring are very similar, they are both methods of invoice finance. The essential differences between Invoice Factoring and Invoice Discounting lie in who takes control of the sales ledger and responsibility for collecting payment, and the level of confidentiality. With Invoice Discounting, your business retains control of its sales ledger and chases payment in the usual way. Your customers pay their invoice amount into an account that is managed by the funding company but is in your name, so confidentiality remains intact without customers knowing a third party is involved.
What is Invoice Discounting?
Invoice discounting is an invoice finance facility used by businesses to leverage the value of their sales ledger and get an advance on outstanding invoices. This invoice discounting facility allows businesses to increase cash flow and access up to 100% of their receivables by using their unpaid invoices as collateral.
Waiting up to 90 days for your customer to pay you can cause your business a serious cashflow problem.
With an Invoice Discounting solution from Skipton Business Finance, you can release up to 90% of the funds locked in unpaid invoices straight away meaning that you can engineer a much more consistent cashflow cycle and run your business more efficiently.
The remaining 10% will be advanced to you as and when your customer pays, less an agreed fee. You'll be really surprised as to how cost-effective Invoice Discounting can be.
Unlike Invoice Factoring, with Invoice Discounting you maintain full control over your credit control and continue to collect your own payments from your customers.
What does Invoice Discounting mean?
Invoice Discounting is a form of flexible Invoice Finance which immediately releases up to 90% of funds tied up in your unpaid invoices.
Invoice discounting is an invoice finance facility when a company's unpaid invoices are used as collateral for a loan. Invoice discounting companies enable businesses to leverage the value of their sales ledger.
According to Wikipedia, Invoice Discounting: allows a business to draw money against its sales invoices before the customer has actually paid. To do this, the business borrows a percentage of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as collateral for the borrowing.
Essentially, invoice discounting is the simplest type of invoice finance. You use your outstanding invoices as leverage to receive an advance on the cash you’re owed and then you collect the payment from any outstanding debtors. Invoice factoring is similar because you also use your unpaid invoices as collateral to receive an instant cash injection. However, the difference is that you hand over your sales ledger to the lender and let them take care of the payment collection as well.
It is the umbrella term for many forms of Invoice Discounting such as Confidential Invoice Discounting, Disclosed Invoice Discounting and Recourse Invoice Discounting.
How does Invoice Discounting work?
With an award-winning Invoice Discounting solution from Skipton Business Finance, we'll release up to 90% of the value of your invoices whilst you retain full control of the credit management. This allows you to keep control of your sales ledger and to manage the credit control function of your business.
The remaining 10% will also be made available when your customers pay, less our fees.
What are the benefits of Invoice Discounting?
Increased cashflow is, without a doubt, the biggest benefit of Invoice Discounting and, indeed, any Invoice Finance facility.
With access to funds up-front, you will have the freedom to make payments on regular bills such as weekly payroll commitments, rent, material costs, HP or lease costs on your vehicles as well as added confidence to deal with unexpected bills if they occur. In our experience, Invoice Discounting really helps a business manage its cashflow much better thus allowing them to concentrate on operating their business much more efficiently.
The flexible service we provide will also ensure that your Invoice Discounting solution grows with your business, therefore there will be no need to increase or re-negotiate as you would with your bank overdraft or other borrowings. As your business grows, so does the Invoice Discounting facility!
This is exactly what we mean when we say that Invoice Discounting can prove much more flexible than a traditional bank overdraft, as your business gets its own customised finance solution tailored to its requirements!
Does your business fit our criteria for lending?
Invoice Discounting facilities are available to most UK businesses, including small businesses.
Our experienced team adopt a commercial approach to underwriting, putting your people and business at the forefront of our decision-making process. We never use a system-style scorecard and make each decision based on the individual merits of each and every business.
Contact us today
If you need an Invoice Discounting solution and get access to working capital within a matter of days, please do give us a ring.
Backed by Skipton Building Society, one of the largest financial establishments in the UK, means we have funds ready to lend to businesses up and down the country.
If you would like a no-obligation FREE quote, please get in touch by ringing us on 01756 694068 (call 0330 1232437 if ringing from a mobile).
You can also email us at email@example.com.
Or why not utilise the handy form on the right and we'll call you back!
Find out more
At Skipton Business Finance, we offer the following types of Invoice Discounting:
For more information about Invoice Discounting, why not download and print off our PDF here.
Alternatively, we offer a range of flexible and tailor-made Invoice Factoring facilities that may better suit your business.