Firstly, the traditional routes of invoice finance. There are two types of invoice finance to choose from. Invoice factoring and invoice discounting. Both factoring and invoice discounting are services that allow your businesses to take advantage of your outstanding sales ledger and raise funds against the unpaid invoices before they are settled.
There are clear differences between factoring and invoice discounting:
With factoring our partner would take control of the sales ledger, chasing customers for payment and managing the credit control of the business. They would also be responsible for processing the payment of invoices, meaning that your customers are fully aware of your business contract with a factoring company. They are effectively your accounts department.
With invoice discounting your customers are unlikely to be aware of your relationship with a financing company and can be run completely confidentially. You maintain responsibility for the sales ledger, payment chasing and invoice processing.
The benefits of factoring and invoice discounting:
Although there are key differences between factoring and invoice discounting, the benefits are the same:
What’s the best solution?
It depends on you, the nature of your business and your particular needs. Business size and the management resources of your sales ledger will be key factors in determining whether factoring or an invoice discounting facility is most appropriate for your business.
Typically factoring works better for smaller businesses. The main reason for this is the collection service and increased credit controls that factoring provides. For larger business with greater resource, invoice discounting is likely to be more appropriate and of course cheaper.
Our unique approach
We provide a different solution to the time consuming, old fashioned method of invoice discounting.
Our solution for this problem is a facility that replaces traditional invoice discounting facilities with a more flexible, modern solution.
Instead of funding every individual invoice on your ledger separately and require debt verification, daily admin and all the other tedious tasks that come with invoice discounting, we work with our partner to agree a facility size in the form of a loan against the average value of your debtor book. Your debtor book is then underwritten for credit insurance where applicable to allow a far lower risk against bad debts for both yourself and our funding partner.
So what are the advantages?
To be eligible you must:
Be a non-seasonal business
Have an average debtor book at a value of £120,000+
Must be principally a B2B not B2C business