Invoice Discounting Key Features and Benefits
Faster access to cash
Invoice Discounting provides you with quick access to the cash tied up in your unpaid sales invoices. Rather than waiting for your customers to pay, you can receive up to 90% of your sales invoice value upfront, usually within 24 hours.
Debtors act as collateral
This can provide directors with peace of mind, as they can obtain the financing they need to support their business growth, without pledging their personal assets as collateral. The lender places a lien on the company’s outstanding debts.
Borrowing flexibility
Invoice discounting is a flexible financing solution that can be tailored to meet the specific needs of your business. The more your debtor book grows, the more cash you can generate.
Confidentiality
Invoice Discounting is a confidential financing arrangement. The lender doesn’t notify your debtor about their involvement, so you can continue to maintain your customer relationships and manage your own credit control processes.
Optional bad debt insurance
Adding optional bdp protects cash flow, mitigates credit risk, provides access to credit checks and debt recovery services, and safeguards your cash flow from the impact of bad debts. You can customise and choose which debtors to cover.
Improved liquidity
Invoice discounting can improve business liquidity by converting unpaid invoices into cash which can be invested to make the business more competitive.
Eligibility
Invoice Discounting is ideal for businesses seeking to enhance cash flow by leveraging unpaid sales invoices.
You must have a minimum turnover of £250,000 per annum for Invoice Discounting.
You need to maintain your own sales ledger and handle credit control autonomously.
You must sell business-to-business and on credit terms.
A reliable purchase order system needs to be in place.
To qualify for Invoice Discounting, you need collectable sales invoices and creditworthy debtors. Having bad debt protection insurance will significantly boost lenders’ confidence in your sales ledger and increase their willingness to provide larger advances.
Invoice Discounting vs Invoice Factoring
| Invoice Discounting | Invoice Factoring | |
|---|---|---|
| Unsecured lending with charge on debtors | ||
| Includes credit control services | ||
| Confidential so customers are unaware | ||
| Optional Bad Debt Protection (bdp) | ||
| Release funds against whole sales ledger |
Frequently Asked Questions
Is Invoice Discounting right for my business?
If your business would benefit from an ongoing boost to its cash flow and it turns over more than £250,000, then Invoice Discounting is a flexible solution that allows you to continue managing your sales ledger and credit control processes.
How do I manage my Invoice Discounting facility?
With Invoice Finance Online (IFO), our mobile-enabled platform puts you in control of your facility wherever you are so you can focus on growing your business. IFO allows you to receive same-day updates for your facility balances so you’ll always know how much you can request and gives you the control to manage your own users, passwords and authorisation limits.
How does Invoice Discounting affect my credit score?
It won’t – although we review your personal credit files as part of our checks, it won’t affect your credit score or ability to get personal finance.
Will my customers know I'm using Invoice Discounting?
No – Invoice Discounting is a confidential service, so your customers won’t know you are using it.