Confidential Invoice Discounting (CID)
Confidential Invoice Discounting is available to well established businesses that are well run and have a history of profitable trading. Typically, they should be turning over £500,000+ per annum, have a net worth of at least £30k and their Sales Ledger / Credit Control functions should, ideally, be fully computerised.
Typical service charges are 0.1% - 1% of turnover and interest costs of 1% to 3% over base.
Disclosed Invoice Discounting (DID)
Disclosed Invoice Discounting is a half way house between Factoring and Confidential Invoice Discounting. Disclosed Invoice Discounting is for companies whose balance sheets are not quite strong enough to meet the requirements for Confidential Invoice Discounting. With Disclosed Invoice Discounting, the Company still manages its own Sales Ledger / Credit Control functions but, as with Factoring, its invoices include an assignment notice requesting the customer to pay the lender direct.
Fortunately, for many companies, this facility quickly develops into a confidential arrangement as the benefits of an improved cash flow take effect. Costs are slightly higher than for CID; a service charge is typically around 0.35% to 1% of turnover and interest costs of 2% to 3% over base.
Single Invoice / Selective Invoice Discounting
This option is ideal for companies dealing with large single orders or peak seasonal trading conditions. You simply nominate the invoice(s) or the individual debtor(s) you want to discount.
This service is provided by a limited number of Factoring companies.
Advance levels vary from 80% to 95% of invoice value and the costs are higher than a standard factoring facility at 1% to 5% depending on the size of the invoice. The minimum invoice value is typically £1,000.