Invoice discounting enables you to release funds tied up in unpaid invoices to help maintain your cash flow and support business growth. Unlike invoice factoring , you retain the responsibility for collecting repayments from your customers. So, you get the finance you need quickly without having third parties contacting customers on your behalf.
Invoice discounting, also known as confidential invoice discounting, is one of the fastest-growing forms of asset-backed, short-term alternative finance for businesses who mainly trade by invoicing customers for products and services. It enables business owners to access the cash tied up in outstanding invoices.
Many lenders will release up to 100% of the value of the invoice within a matter of hours, so you do not have to wait weeks or months for your customer to settle their account. Once the invoice is settled, you will receive the remaining balance minus the lender’s fee.
The cash freed up from your invoices can be used to boost your cash flow, helping you to meet your wage bill and settle regular bills. You can also the cash to invest in your business, whether you need to update stock or carry out general repairs and maintenance.
With invoice discounting, you remain responsible for collecting monies owed. The fact you use invoice discounting as a source of working capital finance remains completely confidential. If you would prefer to relinquish credit control, invoice factoring might be a better option for you, as the lender will chase your customer for payment on your behalf.
Many alternative finance providers tailor their funding arrangements to suit the needs of individual companies. A manageable fee will be agreed with you and you will be expected to pay a service fee and a discount charge. The service fee is based on the value of your invoice portfolio. The discount charge is the amount deducted once the final balance of the invoice has been paid
Invoice discounting enables you to manage your cashflow on a cost-effective and flexible basis. To apply, please complete our online application and you will receive a decision from our alternative lending partners within 24 hours.
You begin the process by invoicing your customer for the goods or services you have delivered, forwarding a copy of the invoice to your alternative finance provider. Your lender will then advance you a percentage of the value of the invoice. Some lenders will do this within a matter of hours. You will be responsible for collecting the monies owed from your customer. Once they have paid the outstanding amount, your lender will credit you the balance minus their service fee.
Invoice discounting offers a flexible, fast and confidential way to support the day to day needs of your business. You do not need to offer collateral assets as security against the finance. The asset, in this case, is the cash tied up in the invoice. Once you have issued your invoice, the funds could be released by the lender within a matter of hours. You can immediately use the finance to manage cashflow or invest in your business without having to wait for customers to settle their accounts. As you do not rescind responsibility for credit control, the arrangement remains strictly confidential.
Many businesses operating across a range of sectors use invoice discounting to help maintain a steady cashflow. Your business could qualify for invoice discounting if you regularly invoice customers for products and services. Alternative finance providers typically require your business to have a projected annual turnover of at least £50,000 with some history of profitability. Some lenders will require you to operate with credit terms of between thirty and ninety days.
With invoice discounting, you will typically be required to process every invoice through your lender. If this arrangement does not fulfil the needs of your business, selective invoice finance might offer a more suitable arrangement. If you do not qualify for invoice finance, we offer a host of other alternative finance products that may suit your needs.