“What is Invoice Finance?
Put simply, invoice finance is secured lending where the security is provided by unpaid invoices. Many companies do not appreciate that unpaid invoices can be the largest asset on their balance sheet and that they are potentially under leveraged and neglecting a great source of working capital. In addition, invoices are also legally recognised allowing the lender the chance to securitise their lending rather than use floating charges in the form of overdrafts.

Almost all invoice finance facilities work on the basis that all acceptable invoices will be funded by the invoice financier up to an agreed percentage the same day or day after they are raised. When the invoice is paid, the invoice financier will pay the resulting balance to the customer minus their fees. If an invoice cannot be collected it is returned to the customer or, if it is a non-recourse facility, a credit insurancepolicy covers the invoice.

What is Factoring?
Factoring is the branch of invoice finance which is designed for smaller companies due to the additional services which are offered by the factor. In addition to the finance facility, the factor can also provide full sales ledger management including credit control and collection. For companies with a low number of stuff this can be a lot more cost effective than employing full time member of staff to act as a financial controller.

What is Invoice Discounting?
Invoice discounting is designed for companies who have a financial management and control process in place. The service is predominantly about money and not the additional services which are offered in a full factoring service. Invocie dicounting is a growing service can allow several hundreds of millions to be raised.”