Factoring and Invoice Discounting

Invoice Finance and Your Small Business

Invoice Finance and Your Small Business

As a small or medium enterprise, you’re no doubt aware of the issues faced when trying to secure funding. Securing credit from traditional lenders such as banks is becoming increasing difficult, with many businesses receiving nothing in the way of financial support. And for those who do secure some form of funding, in most instances it isn’t enough. This has led to the creation of many asset-based forms of funding, such as invoice finance. Invoice finance explained In the main, invoice finance solutions come in the form of factoring and invoice discounting, with both involving the same principle of funds being provided in accordance with the invoices issued. How Does Invoice Finance Work? As soon as you issue an invoice, the invoice finance provider will immediately release an agreed perce... »

The Difference between Factoring and Invoice Discounting

The Difference between Factoring and Invoice Discounting

Both factoring and invoice discounting are financial services that enable businesses to release the funds tied up in unpaid invoices. Both involve a third party company advancing money against outstanding debtor balances. There are clear differences between factoring and invoice discounting: With factoring the third party company takes control of the sales ledger, chasing customers for settlement of invoices and managing the credit control of the business. They are also responsible for processing the payment of invoices, meaning that your customers are fully aware of your business contract with a factoring company. With invoice discounting your customers are unlikely to be aware of your relationship with a financing company. You maintain responsibility for the sales ledger, payment chasing... »

Factoring and Invoice Discounting

Factoring allows you to raise finance based on the value of your outstanding invoices. Growing businesses, in particular, often find that factoring is a more flexible source of working capital than overdrafts or loans. Factoring also gives you the opportunity to outsource your sales ledger operations and to use more sophisticated credit-rating systems. This guide to invoice finance outlines: How factoring and invoice discounting work. Whether factoring is suitable for your business. How to choose a factor. »