Invoice discounting is a type of invoice finance that allows businesses to release funds tied up in their sales ledger. Invoices are sold to a third party who will pay a percentage of what the invoice is worth, minus a service fee. This means you don’t have to wait for your invoice to be paid by your customer under your payment terms.
Invoice discounting works in the same way as invoice factoring, however, you maintain responsibility for your credit control. This is sometimes the preferred solution for businesses as your customer will not be aware you are using an invoice finance facility.
Below is an example of how invoice discounting works:
Raise your invoice for goods or services and notify lender via their online Invoice Discounting system.
Your lender will then transfer the lending balance at the agreed rate, directly into your bank account.
You collect payment from your customer at the agreed credit period, for example 30 days later.
You’ll receive the balance of the invoice from the lender, minus any agreed fees.
For more information about invoice discounting, contact our specialist team on 0800 009 6106 or hello@myinvoicefinance.co.uk.
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