Invoice discounting is a more flexible source of working capital than loans or bank overdrafts and a business is likely to accrue additional benefits, including:
1) Maximising cash flow
Invoice discounting enables a business to raise up to 100% on outstanding invoices. An overdraft secured against invoices would only raise in the region of 50%.
2) Automatic credit lines
When entering into an invoice discounting agreement, the business negotiates an initial credit line, which then grows in step with the sales of the business. Bank finance, on the other hand, has to be continually renegotiated.
3) Retain control
Under an invoice discounting agreement, you keep complete control over your customer relationships, free to manage your own ledgers and chase your own debts.
4) Total confidentiality
Your customer will not be aware of the finance arrangement with the invoice discounting company.