Invoice Discounting
 

Invoice Discounting

Cash Advances

Invoice discounting provides the cash flow finance and debt management solution that your business needs to succeed. It produces immediate cash advances from the funds you are already owed by your customers (debtors), thus increasing your working capital. Invoice discounting companies will typically provide an initial cash advance up to 90% of the value of outstanding invoices within 24 hours. The invoice discounting agreement will also provide an ongoing facility that increases in line with the volume of sales and values of invoices you issue.

Invoice discounters will also provide finance against stock, plant and machinery and property - see Asset based lending

Unlike factoring you maintain full control of your sales ledger, the issuing of statements and collection of cash. As a result the service charge is much lower.

How Invoice Discounting works

 

You raise an invoice as usual. You send a sales daybook listing to the invoice discounter either by post or, more likely, via the internet.

The invoice discounter makes available the agreed percentage of the invoice value, up to 120 days old, by electronic transfer within 24 hours.

You send out statements and chase payments as usual.

The invoice discounter opens a trust account in your company's name into which you pay all cheques received. Alternatively, you can include the bank details on your invoices and the client can pay directly into the account.

You notify the lender of all deposits as received and he credits you with the balance i.e. less the initial payment and their charges.

The invoice discounter provides monthly bank statements showing all transactions although these details can be accessed by you at any time online.

Invoice Discounting
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