What is Invoice Discounting - Business Finance

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Invoice Discounting

Invoice discounting is a type of business finance known as Invoice Finance. Invoice Finance is a business finance option which allows you to borrow the cash that you have already earned which is tied up in your sales ledger.

What is Invoice discounting?

Invoice discounting releases the cash tied up in your unpaid invoices, often within 24 hours of you raising the invoice. Discounting can often release up to 95% of the value of your invoices, which can make a huge difference to you working capital and the growth and development of your business.

For example if you invoiced your customers 100K, you could receive up to 95K within 24 hours of raising the invoices! Imagine the possibilities for your business.

How does Invoice Discounting work?

Discounting works in the following way:

You raise the invoice to your customers for the goods and services you have provided in the usual way. The discounting company then pays you up to 95% of the value of the invoices often within 24 hours of you raising the invoices. You then collect the payments from your customers when its due and you repay the Discounting company minus a small feel. Simple!

The process is flexible and controllable and can be kept confidential so that your customers don't even know that you are using discounting.

Who is discounting for?

Discounting is most suitable for start up or established larger businesses who have the resources to collect the payments, manage the sales ledger and the credit control process. You need to have a projected turnover of more than 50K and you need to do business with other businesses.

The benefits of discounting

The benefits of discounting are:

  • Its flexible
  • Its controllable
  • You improve your cash flow
  • Its not a loan, you have already earned the money
  • The more you invoice the more you can borrow
  • You don't need to offer up assets as security
  • Its great for short and medium term borrowing
  • It releases the money that is tied up in your sales ledger
  • You get immediate access to the money you have already earned
  • You get paid up to 95% of your sales invoices often within 24 hours
  • Your cash flow worries are reduced or disappear
  • You can use discounting to help you become solvent
  • The service can be kept confidential

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