What is Confidential Invoice Discounting?

What are the benefits of using a Confidential Invoice Discounting facility?

Confidential invoice discounting releases cash against your UK and/or export invoices whilst leaving the control of the sales ledger, sending statements and the chasing of outstanding invoices in your hands. Your customers will be unaware that you are using a discounter.

With this type of facility, the discounter has less direct involvement over how you collect your debts, and is more distant in controlling thier security, namely the invoices. Therefore, invoice discounters prefer to provide this type of sales ledger solution to companies who have annual sales in excess of £250,000, with a minimum net worth of £25k and with good administration systems.

How much does it cost?

Because you retain the day-to-day management and control over your debtors, invoice discounting can be a very cost effective way of funding your business. The cost of money drawn against your sales ledger would be charged at between 1.5-2% + bank base rate, in addition you would pay a small administration charge of around 0.1%, subject to a minimum charge of £5000 per annum.

Do I have to use my Bank’s invoice discounter?

We are committed to getting you the most flexible funding package that works best with your company. It may well be the invoice discounter owned by your bank. However, by working with you to find the correct solution, we may suggest an independent or a discounter that can offer funding against other assets on your balance sheet.

What about Asset Based Lending or Stock finance?

As the UK invoice discounting market has grown, so has the range of products available. In recent years US banks have introduced Asset Based Lending to the UK market. This type of solution will provide a revolving credit facility secured on your debtors as well as stock. For companies looking to re-finance all their banking lines this can provide a fully flexible package. For old economy companies this works very well as you are able to fully leverage off of all your assets. In addition to the revolving credit line, term facilities are also available secured on plant and machinery together with property. Some UK lenders are also now able to offer these types of facilities.