Invoice Discounting
A confidential form of invoice finance where businesses borrow against their sales ledger while retaining control of credit management.
Invoice discounting is a confidential form of invoice finance. The finance provider advances funds against the value of outstanding invoices in your sales ledger, but you retain full control of credit management and customer relationships. Customers continue paying you directly and remain unaware of the facility.
Because you manage your own credit control, invoice discounting typically requires a more established business (usually £500,000+ turnover, two or more years trading) with robust internal credit management processes. The lender will conduct periodic audits of the sales ledger to verify the quality of debtors.
Invoice discounting is generally cheaper than invoice factoring (0.2-1.5% of invoice value per 30 days vs 0.5-3% for factoring) because the lender is not providing the credit management service. For businesses with strong credit control and customer relationships to protect, it is the preferred form of invoice finance.
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