Invoice Discounting

Invoice discounting is another popular form of invoice finance.

It works in a similar way to invoice factoring as it enables a business to improve its cash flow by allowing it to receive early payment for customer invoices.

Where it differs is that it permits a business to retain control of its sales ledger. In other words the company’s credit control team will maintain direct contact with the customers and be responsible for collecting the debts.

The money collected will be paid to the facility provider against the amount advanced against the invoice, with the balance being retained by the company.

As with factoring, invoice discounting provides the working capital that would usually be tied up as an asset on the balance sheet.

It is often provided on a confidential basis so customers are unaware that a company is using an invoice finance facility. However disclosed invoice discounting solutions are common.

Debtor protection insurance can also be incorporated to safeguard cash flow against bad debts.


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Case studies

Jan 10, 2013

A hardware store in Leicester approached CAS to ask us to have a look at its current invoice finance agreement and to advise them whether it was getting a good deal.

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