Invoice Factoring vs Invoice Discounting: The key similarities & differences

Are you looking for an Invoice Finance solution but are unsure on whether Invoice Factoring or Invoice Discounting is the best option for your business? Are you worried you will miss out on the benefits of one solution if you decide to go for the other? Here’s our quick guide to the key similarities and differences to help you decide.


The similarities…

Consistent cashflow

The first thing to note is that both Invoice Factoring and Invoice Discounting will give you equal benefits of immediate access to working capital that is otherwise tied up in outstanding invoices, as well as the same competitive funding levels. You will no be at a disadvantage when it comes to the financial benefits of Invoice Finance if you choose one type of facility over the other. Invoice Finance allows you immediate access to cash tied up in your outstanding invoices, meaning you can use that hard-earned money instead of waiting up to three months to be paid. This immediate access to working capital allows you to have a consistent monthly cash flow and relieve the burden of gaps in your cashflow forecast.


Dedicated Relationship Manager

Regardless of your chosen solution, as a client of Skipton Business Finance, you will have direct access to a dedicated Relationship Manager who will be always be on hand to help with the running of your facility. Our team are experts in understanding Invoice Finance and how a facility runs so you can feel assured that there will always be someone there for support. We pride ourselves on a personal approach so you can feel at ease knowing that there will always be help at hand whenever you need it.


A flexible facility

We know that finance for businesses is not a ‘one-size-fits-all’ process and we understand that every business has different needs and different ways of running. Our Invoice Finance solutions are tailored to each business that we work with and will grow in-line with your business growth. This means that you don’t have to worry about outgrowing your funding limit as you would with a traditional bank overdraft. Your facility will not only grow in-line with increasing sales but will also shrink in-line with any seasonal drops in sales, so you will never be borrowing more than you need.


Confidence to grow & focus on other areas

The benefits that come with immediate access to working capital mean that you are able to focus on the development of your business. Whether this is growth, expansion or product development, losing the restraints of an inconsistent cashflow means that you can focus on those areas of your business and instead focus on looking ahead. Any Invoice Finance facility will mean you will be able to free up cash that you would otherwise be waiting to receive. Not only will this allow you to meet your commitments such as supplier payments but also invest in the future of your business.


So, what are the differences?

Instead of waiting for all of your customers to pay you, by using Invoice Factoring, you are able to receive funds of up to the value of 90% of your unpaid sales invoices. Our experienced and professional credit control team will then take the responsibility for securing the payments from your valuable customers. The remaining 10% is then advanced to you upon payment from your customer, less a fee. Invoice Discounting works in the exact same way however with this solution, you are able to maintain responsibility over the credit control process. This is suitable for businesses who prefer to chase customers for payments themselves or for those who may already have a well-established credit control team.


Whether you opt for Invoice Factoring or Invoice Discounting, you will have access to all the great benefits of Invoice Finance. We know that it is not always a straight-forward decision which is why our expert team are available to discuss your options with you.


Get in touch today to find out more or take a look at our Invoice Finance solutions below.