Unlike an overdraft for working capital or loans, invoice discounting automatically grows as your business grows. It is an excellent way to improve cash flow and appeals to a diverse range of businesses, including recruitment, manufacturing, wholesale and distribution, service businesses, transport and logistics and IT.
Finding the right lender can be very time consuming and also costly.As well as the pricing of the facility there is also the length of the contract, what happens if your customers delay payments ,additional costs and the overall service you get.Without day to day knowledge of the sector it can be very difficult for you to compare lenders.
Be aware of the comparison sites
Some are owned by lenders and others feed all their leads to one lender.Many are owned by insolvency companies who are looking to introduce your business to a lender in return for insolvency work.We are totally independent and can choose the most competitive deal for you.
- you trade with other businesses;
- issue invoices with trade credit terms from 14 to 90 days;
- have an annual turnover above £500,000;
- have an established and well run credit control function.
How does invoice discounting work?
- Invoices are raised as normal and sent to your customers;
- You update the factoring company online;
- Up to 85% of the invoice value is then made available within 24 hours of the date the invoices are received;
- When payment is received from your customer the balance is immediately available to you.
The benefits of invoice discounting
- it improves your cash flow-unlock the money tied up in your invoices. Free up cash straight away to improve your financial planning and enable growth.It can be available within a week.
- up to 85% of invoice value upfront- You then receive the remainder when your customer pays the invoice, less agreed fees.
- confidentiality-this service can be offered on a confidential basis so that your customers need never know that you have the facility in place.
- Bad debt protection-a will protect you against the risk of incurring a bad debt. Cover varies from company to company but you can obtain up to 100%.
- retain control of your credit collection-if you have a well run credit control function and want to maintain full control, then invoice discounting is for you.
- revolving facility-your invoice discounting facility grows as your business grows, giving you maximum flexibility without having to renegotiate fixed limits.
- Online access, most lenders provide the ability to manage your account online. Submitting invoices, reviewing your account, requesting money and reconciliation of your sales ledger can be carried out simply online. All lenders however have different systems and some of these facilities may not be available with all.