How does Invoice Discounting differ to Factoring?
Invoice discounting differs to factoring in that you (the client) continues to manage your debtor book collections with the funding company releasing agreed advance payments against your debtor book. Often it is done on a confidential basis so your customers will not know that you are funding your debtor book.
Often the requirements for Confidential Invoice Discounting (CID) are that the client has a dedicated collections team to manage the debtor book administration. Most CID clients are generally stronger financially and subject to audits by the funder more regularly than most factoring clients just to make sure everything is going to plan – most clients find these audits quite useful too.
Is Invoice Discounting cheaper than factoring?
Normally yes, as you are carrying out collection of the debtor book.
Is Invoice Discounting available to companies who export?
Yes, just like Factoring is, subject to meeting underwriting criteria.
Is there a similar product available for slightly less established / strong companies?
For customers who would like the confidentiality of invoice discounting but do not meet the criteria, there is a product available called CHOCS (Customer Handles Own Collections). This is confidential factoring and several factoring companies now have this option.
Please contact us to discuss options for your debtor book finance.