Invoice Discounting

Invoice Discounting                              Enquiry Form

What is Invoice Discounting?

Invoice discounting is a way of providing funding against the security of your company's outstanding customer invoices - invoice finance. It release funds that are already owed to you by your customers. For example, you complete an order of goods or services for a customer and agree credit terms of say 30 days. You supply the product or service and issue an invoice, say £10,000. The customer could then take 30 to 40 days, if you are lucky, to pay the invoice. Meanwhile, you can convert this invoice into cash of up to £9,000 ( 90%) within 24 hours by using invoice finance.

What happens next?

You collect the full amount of the invoice from the customer and pay back the advance, with a small service fee for administration and a funding charge for the cash advance, at an agreed percentage rate over the bank rate base, payable only on what amount you utilized and for the days outstanding.

Does the customer have to know about the invoice discounting company?

No - a confidential facility is available, if your own sales ledger management and debt collection systems are good and your turnover is in excess of £250,000. You retain control of your business, with your sales ledger and credit control staying in-house. If you do not have an effective sales ledger management capability or your turnover less than £250k, then you can opt for Factoring

Why use a invoice discounting company?

There are a number of benefits to having 24-hour access to cash flow.

Invoice finance gives you cash when you need it and the amount you need. The amount of funds available grows in line with the growth of  your business and is agreed in advance of you supplying the goods or service. Bank overdrafts are not usually flexible enough to count on. The cost often can be offset against supplier discounts and the cash available can help generate extra sales.

What is the benefit to a business in using invoice discounting?

• Some businesses, particularly young or start up companies, do not have sufficient assets to provide security for traditional bank lending.

• As turnover grows, your funding grows with it and there is no need to pay fees or to re-negotiate with your bank for increased overdraft arrangements.

• No requirements for 1/2/3 years trading history before being considered for finance.

• Confidential invoice finance means only you and the service provider is aware of the facility.

Can I transfer to a new invoice discounting company?

Yes, many companies change their provider. The competition between invoice discounters can increase flexibility, improve service and maybe bring down price. The change over can easily be arranged, without cash flow delays.