Invoice Discounting

How can I Access Invoice Discounting?

  • There are so many companies offering invoice discounting solutions, that it’s hard to make an informed decision.
  • Funding Market has an in-house team of experts who offer professional advice on the ideal funding option for your business.

Do you need to release funds from unpaid invoices? Invoice Discounting allows you to maintain control over the collection of payments.

What is Invoice Discounting?

With invoice discounting, the business sells unpaid invoices to an invoice discounting company. Invoice discounting and invoice factoring both help companies expand and grow by ensuring you have the cash flow to run your business.

Invoice discounting has become a major source of working capital due to the restrictions of bank financing.

Similar to invoice factoring, the risk is minimal for the lender because the invoice due from the debtor is the collateral for funds. You’re owed money so the invoice discounting provider gives you most of it before the customer pays you.

Invoice discounting is sometimes referred to as confidential invoice discounting. Unlike invoice factoring, the customer doesn’t know you’re using an invoice discounting provider. The task of collecting payment lies with the business as against invoice factoring where the invoice discounting company recovers debts on your behalf.

How Does Invoice Discounting Work?

    • You invoice your customer and send your lender a monthly summary of your sales.
    • Your lender pays between 80%-100% of the value of the invoice within 24 hours.
    • You collect invoices from customers and maintain your relationship with them as usual.
    • Your lender pays the remaining balances minus fees. The fee structure is transparent and made clear before the borrower signs the finance agreement. Your lender may reduce their fees after a specified number of invoices are sold. They may also offer credit insurance to mitigate non-payment by your customers.

When is Invoice Discounting the Right Option for Your Business?

If you need a quick cash injection to help with growth plans, invoice discounting could be the option that allows you to focus on developing your business.

Invoice discounting bridges the gap between raising customer invoices and getting paid. You’re better equipped to fund growth and manage your day-to-day activities with a fast cash loan.

Invoice discounting is a good option if:
  • You provide goods and services to other businesses.
  • You meet the level of turnover required by a lender.
  • You don’t have bad debts.
  • You have effective credit control procedures and demonstrate a capable management team.
  • You want to manage credit control in-house.
  • Your business has been financially viable for up to six months.
  • Customers have a minimum of 30 days to pay and they pay on time.

If you don’t conduct credit control management in-house, invoice discounting may not be the right option for your business. You’re more likely to get invoice discounting if your business is established, rather than a start-up.

What Are the Benefits of Invoice Discounting?

  • Get access to cash within 24 hours after application.
  • No hassles meeting payments or making crucial purchases relevant to the growth of your business
  • Get cash for the value of your invoice as soon as you raise them
  • Manage your sales ledger and maintain credit control
  • A confidential process where customers aren’t aware that you’re funded through invoice discounting.
  • A reliable source of working capital that helps you budget effectively from month-to-month.