Invoice Discounting
Invoice discounting involves the sale for cash of approved invoices to a financial institution.
Key Features
Typically less than the cost of an overdraft, Invoice Discounting is a fully confidential facility that offers flexible funding that grows in line with your business. Bad Debt Protection is also available, offering you peace of mind against any bad debts.
Who is it for?
- Limited and sole traders/partnerships
- Companies from 1 year old to multi-million pound turnover
- Management teams attempting Buy Outs/Buy Ins, company acquisition and refinancing
- Companies with rapid growth models
- Companies experiencing financial difficulties
- Companies with seasonal sales cycles impacting cash flow
- Factoring clients who are in the position to bring their credit control back 'in house'
Benefits
- Frees Cash - Releases up to 90% of the money tied up in unpaid invoices
- Money to Invest - Improved cash flow allows you to invest in the business
- Expand Credit Terms - Offer credit terms to your customers, confident that credit checks are easy obtained
- More Funding - Allows borrowing beyond the levels of normal unsecured overdrafts, usually for a much lower borrowing rate
- Flexible Limits - Funding grows in line with your turnover, the more you invoice the more funding available
- Trusted Names - All invoice finance companies that work with Simply Business Finance are members of the Factors & Discounters Association
What are the next steps?
- Choose which companies you would like to research
- Get quotes from 20 invoice discounting companies right now!
- The invoice discounting company will require some basic financial information and the structure of your invoicing, to design the right deal for the business
- If you are currently using factoring or invoice discounting, compare your facility to our panel of providers. To move providers there is a standardised process known as an inter factor transfer which is normally completed in 24 hours
Compare Quotes
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Frequently asked questions
What is the standard contract length?
12 months is the usual length of a contract, with a 1-3 month notice period. Some companies will offer you a 3 or 6 month trial to see if the facility is a good fit for your business.
Do I have to invoice discount all of my invoices?
Invoice Discounting contracts list excluded invoices specifically so there needs to be a demonstrable difference between included and excluded invoices. Sales to associated companies, contra accounts and cash/credit card sales are automatically excluded. The service fee reduces in relation to an increase in turnover so it is normally most cost effective to include as much as possible.
What will my customers think if I use this kind of facility?
Over 40,000 businesses in the UK use invoice finance and growth in the sector usually runs into double digits year on year. Invoice finance is a well established and cost effective alternative to a traditional overdraft. While some companies will start using a facility when they are experiencing a downturn in sales or a sticky patch in their cash flow, a larger number will turn to factoring because they are trying to keep up with their ever increasing order book! The image of the product now is vastly different to it's image in the 1980s, with companies of £500 million turnover or more using it as their principal funding solution. All invoice discounting facilities are fully confidential so your customers will not be aware that you are using this.