Within Invoice Finance comes an array of solutions that could be beneficial to a business. Many business owners are put off Invoice Finance because it often comes with the preconception that it involves the funder chasing customers for payments. There a large range of solutions where this is not the case. Although Invoice Factoring involves the funder managing the responsibility of collecting customer payments, Invoice Discounting allows businesses to maintain the responsibility of their credit control process. Invoice Discounting works just like Factoring in that it allows business to access up to 90% of their outstanding invoices, with the remaining 10% made available to them when the customer pays.
Why is Invoice Discounting beneficial?
- Like Factoring, it speeds up working capital and allows businesses to invest in other areas.
- Rather than waiting for their customers to pay before they can pay their clients, businesses can benefit from quicker supplier payments meaning less pressure and restriction.
- It allows businesses to maintain responsibility of their credit control process, which can be preferable to some businesses.
- Businesses are able to maintain a close relationship with their customers, particularly if they are more comfortable getting in touch with their customers.
- It is suitable for mature businesses that may already have an established credit control team in place.
- Invoice Discounting can be arranged confidentially so customers do not need to know of a business’s involvement with an Invoice Finance provider as they remain the main contact for the customer.
A take on Invoice Discounting from Keith Thomas, Director at Ecokeg:
“A Confidential Invoice Discounting facility has allowed us to be flexible so, as our debtor book goes up in times of peak demand, the facility goes up with it,”
“The reason we chose Confidential Invoice Discounting over Factoring is that I think the relationship we have with our customers is important.”
- Increased cashflow
- Better working capital allowing for expansion and development
- Allows the same benefits as Factoring, but the business remains in control of chasing customer payments
- Suitable for businesses that already have a credit control process in place
- Ideal for companies who don’t meet traditional lending criteria
- Flexible as funding can grow in line with turnover
Things to consider:
Invoice Finance is a great external financing option for businesses, however, with all business prospects, it is important to consider all of the options available.
All businesses are different therefore your financing options might be different too. If you do choose to go for an Invoice Finance option, make sure you research which form will be best for your business. Most lenders will be more than happy to advise you on the most appropriate option for you.
You can find out more information about our Invoice Finance products below:
- Invoice Factoring
- Invoice Discounting
- My White Label
- Disclosed Invoice Factoring
- Recourse Invoice Factoring
- CHOCS Invoice Factoring
- Skipton Select - Interest-Free Invoice Factoring
- Confidential Invoice Discounting
- Disclosed Invoice Discounting
- Recourse Invoice Discounting
- Invoice Discounting for Small Businesses