In the UK a lot of businesses have an expectation gap; The expectation gap is the gap between the what an invoice discounting firm is and the various public expectations of what an invoice discounting firm actually does.

  • Invoice discounting is most suited to business selling goods on credit.
  • Invoice discounting is best suited for a business with a good spread of customers
  • Invoice discounting can help a business grow if it needs funds to finance an increasing level of sales.
  • Invoice discounting can help a business grow if it is constrained by lack of cash flow because debts are not being collected quick enough
  • A business could grow by using invoice discounting if it is affected by seasonal demand issues.
  • Invoice discounting can help a business grow if it has available financial or administrative resources to collect debts

How can invoice discounting help grow a business

An invoice discounting company will pay up to 85% of submitted invoices. Invoice discounters may be independent organisations but are often subsidiaries of major banks or financial institutions. Please note that an invoice discounting firm will not want to pay out money that they do not think they will get back. Hence, an invoice discounting firm will want to closely examine the applicant company, assessing the financial stability of the collections department.

Invoice discounting will help grow a business because the company continues to collect its own debts and perform its own credit control functions. While the invoice discounter will be in the back ground, checking regularly to see that the company’s debt collection procedures are effective, the company’s customers need know nothing about this.

How can invoice discounting improve cash flow?

  • Working capital position is improved because cash is received as soon as invoices are sent to the invoice discounting firm
  • Cash flow is improved allowing a business to compete with larger, more established businesses.
  • A business using invoice discounting can grow as large as it likes because an invoice discounting facility can grow in proportion to sales.
  • A business can grow as large as it likes because it is not held back by insufficient cash flow
  • A business can grow with invoice discounting because the increased cash flow gives increased bargaining power with suppliers

Please note that our advice team has access to a full panel of invoice discounting firms, meaning that we are able to source invoice discounting deals from the invoice discounting market. Please call us on 0800 597 4757 or apply online.