Invoice Discounting Explained

For many small businesses seeking to raise instant funds for working capital Invoice discounting may be the answer. There are two types available, called Confidential and Disclosed. As their names suggest, with Confidential the customers are unaware of the Discounters involvement, whereas where it is disclosed they are.

How Invoice Discounting Works.
Client sends customers invoices for work completed
Client sends day sales ledger to Discounter
Discounter pays up to 85% of invoice values to client
Client collects payment from customer and banks these into a designated account
Discounter collects funds from account and releases the 15% balance still retained less his charges.

For many new businesses there will be an existing ledger available and the Discounter will be able to release those funds which qualify to the client.

Invoice Discounting Costs
These consist usually of a :-
Service fee which can be between 0.1% and 1% of turnover
Cost of money which is the interest charge over base for teh advanced money
There will also in a majority of cases be a minimum annual charge.

If you would like further details or you would like to speak to someone about invoice discounting please call Steve Thatcher on 0800 6800 759