Invoice Finance is a collective term for factoring and invoice discounting.
Both of these financing arrangements involve the release of cash from a business’s unpaid invoices. When a business raises a sales invoice, the invoice finance provider makes usually between 75% and 90% of the invoice value (including the VAT element) immediately available to the business. Once the sales invoice is paid by the customer, in line with the usual payment terms on the invoice, the invoice finance provider makes the remaining balance of the invoice available to the business.
Factoring is more suited towards younger, smaller businesses, who may benefit from a third party (the factoring company) monitoring and collecting their unpaid invoices. A factoring agreement is a disclosed facility, which means that a business’s customers are made aware of the factoring company’s involvement, as the debtor pays the factoring company directly rather than the business itself.
Invoice Discounting is an undisclosed facility, in that the ultimate customer is not aware of the involvement invoice finance provider, as it continues to pay the business directly. Invoice Discounting is available to more mature businesses, with sound credit control procedures and financial discipline.
Our experts have significant experience of the invoice finance market, many of them having being previously employed by invoice finance lenders and having utilised invoice finance in their own businesses. Their extensive knowledge of the invoice finance market means that they are ideally placed to be able to secure their clients the most competitive pricing, whilst ensuring that they place their clients business with an appropriate lender that will offer the highest levels of service possible.
For further assistance and help in securing term invoice finance facilities call 01423 423 042.