Invoice Discounting - What is it

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Invoice discounting allows funding to be received against the sales ledger in the same way as factoring, but without the credit control option. Therefore your customers will be unaware of the involvement of any discounter. There is a good chance that some of your suppliers are already receiving the benefits of invoice discounting, but this fact is not disclosed to you. Many businesses prefer this route as it is cheaper and they are more than capable of collecting their own debts. Factoring companies will allow an invoice discounting facility, provided you can demonstrate an adequate paper trail and have the ability to collect the debt in house.

How much does invoice discounting?

Whilst the cost of funds remain comparable to bank overdraft rates, the service fee is much less, typically 0.1% to 1% but with a minimum monthly fee of around £4,000. Some invoice discounting providers are willing to offer additional products to complement the discounting facility. This involves taking all assets of the company as security and providing finance against plant & equipment, property and stock.
This is referred to as asset based lending and can be particularly effective in a number of cases:

  • Funding of seasonal stocking requirements
  • Providing a one stop shop for financing acquisitions
  • Management buy outs where the assets need to generate increased leverage in the short term
Contact us today about our Factoring and Invoice Discounting : email: enquiries@fundingsolutions.ltd.uk : tel: 0844 4144379