Invoice discounting has seen huge growth in recent years, partly fuelled by the banks’ desire to move away from traditional overdraft facilities. As with factoring an invoice discounting facility will give the company access to funding at up to 85% of sales invoices within 24 hours of the invoices being raised.
Where invoice discounting differs from factoring is that it is the provision of finance only with no sales ledger management or credit control undertaken by the factoring company.
This tends to make invoice discounting more suitable for larger companies with established accounting systems and as the security is less for the factoring company they tend to offer this type of facility to companies with a slightly stronger Balance Sheet than is the case for factoring.
The big advantage of invoice discounting is that the availability of funding isn’t fixed as it is with more traditional bank overdrafts but will automatically increase in line with increasing sales so growing companies are safe in the knowledge that the funding will always be there to cope with growth.
There are a large number of companies actively competing for invoice discounting business but differences in the operational methods of each company mean that the invoice discounting company that might be the most suitable for one company could cause financial problems for the next.
Our advice is completely independent and free of charge without any obligation whatsoever so please feel free to contact us to discuss the most appropriate funder for your needs.
Factoring and Trade Finance Solutions
5 Torridge,
Hockley,
Tamworth,
Staffordshire B77 5QL
Tel: 01827 707680