Many business related activities or services carry with them their own set of jargon, which can be both baffling and essentially incomprehensible to those on the outside.  The world of invoice financing is no different to the norm. 

Fortunately, neither the use of invoice financing nor its terminology is really all that complicated once it has been sensibly explained, and so here is our guide to the terms most commonly associated with the invoice financing system.

INVOICE DISCOUNTING – Like invoice factoring, this refers to a company that will provide finance to another company by purchasing the debt owed to them on invoices.  Unlike an invoice factoring company, however, invoice discounting facilities do not offer any form of credit management service.

INVOICE FINANCE – This is used as an umbrella term for all forms of the service whereby companies purchase other companies’ invoices, including both invoice discounting and invoice factoring.

NON-RECOURSE – This refers to a form of credit protection taken out to ensure that the moment the invoice has actually been purchased by an invoice financing company, it cannot be handed back to the original business in the event that the customer does not pay their bills.

PRE-INVOICING – This simply refers to the issuing of an invoice before any goods or services have actually been provided to the customer.

PRE-PAYMENT – This refers to the amount of money that an invoice financing company is willing to purchase an invoice for.