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What is invoice discounting?

Invoice discounting is method of a business gaining access to constant cashflow by signing up to a facility that offers fast access to money against credit invoices raised. Under an invoice discounting facility a business retains control over the administration of its sales ledger. Invoice discounting is an excellent, cost-effective way for certain businesses to improve their cashflow position.

What is disclosed invoice discounting?

Disclosed invoice discounting is a type of invoice discounting that is for businesses that want a confidential invoice discounting facility but do not qualify for a confidential service. An invoice finance company would, most likely, initially offer a disclosed invoice discounting facility for a set period and then upgrade the service to a confidential facility after a trial period.[/vc_column_text][vc_column_text]What are the similarities between confidential invoice discounting and disclosed invoice discounting?

  • Under both invoice discounting types the business remains in charge of its sales ledger function.
  • Under both invoice discounting types the business remains in charge of its credit function.
  • Under both invoice discounting types the business remains in charge of its accounts function.

What is the difference between confidential invoice discounting and disclosed invoice discounting?The main different between confidential invoice discounting and disclosed invoice discounting is the following:

  • Confidential invoice discounting is totally confidential from customers
  • A businesses clients or customers have no reason to suspect an invoice finance arrangement is in place.
  • All payments are made direct to the invoice discounting company whereas under a confidential invoice discounting facility payments are made to the business direct.
  • Disclosed invoice discounting is about one percent (1%) more expensive than a confidential facility. This is because the service includes credit control and payment functions.

What sort of business would suit disclosed invoice discounting?

  • Newly formed business
  • A business with a small level of net assets
  • A business whose customers are new
  • A business whose collections department is not efficient enough.
  • A business with a turnover of under £250,000.

We offer sound factoring and invoice discounting advice to help get recruitment agencies through those difficult early days. Call 0800 597 4757 or apply online.