Invoice discounting is an alternative funding solution which gives businesses access to cash tied up in unpaid customer invoices. Using an invoice discounting facility allows a company to borrow money using their raised invoices as proof that they will be able to afford repayment.
When using invoice discounting, a company receives a percentage of the value of their raised invoice from their lender in advance. The company liaises with their customer to arrange payment and, once the invoice has been settled, they are paid the remaining amount minus an agreed fee.
Invoice discounting allows companies to quickly access funds they are owed. Once approved, invoiced money can be available to a business as soon as they raise the bill with their client. This immediacy and flexibility allows businesses to improve cashflow and meet their ambitions.
Invoice discounting is suitable for business to business companies who want to manage their own credit control. There are a variety of reasons that companies choose to use invoice finance, such as late payments or trading expansion.