Invoice Discounting

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What is Invoice Discounting? A common question we get asked at Pinnacle. This is because many businesses understand invoice factoring but might be unaware of invoice discounting. Invoice discounting is the process by which a business invoices another business (B2B) for work they have completed. Once they invoice out the invoice financier will advance typically up to 90% of the value of the invoice. The business will be responsible for collecting payment from the customer. They still administer credit control and commonly a business must upload an amount the invoice was for onto an online portal. Not having to send copy invoices to the finance company and retain credit control. Invoice discounting is reserved for the higher turnover level businesses with typically over 12 months of trading history and turnover levels in excess of £300,000. Many businesses think of it as a short-term loan or cash advance against outstanding invoices with the security of the funding.

Invoice Discounting vs. Invoice Factoring

Invoice Discounting

There are benefits to each type of invoice finance facility depending on the requirements. The main benefits of invoice discounting are, that more control is kept by the business and can retain customer relations when collecting payments. Secondly, the workload is less for the business and when used correctly can really benefit cash flow.

Factoring

The benefits of factoring can be reduced workload in relation to credit control, as the invoice financier can collect the payments. Furthermore, factoring can be used to support SMEs across the UK with business growth and obtaining a positive cash-flow position. Especially for new start businesses that need access to commercial finance.

Find out if you are eligible

Pinnacle business finance is there for you when you need us. We are a customer-focused broker which specialises in invoice finance and commercial loans. We can assist with securing and tailoring an invoice discounting facility for your business. The enquiry form is listed below for you and one of our funding specialists will be on hand to support you.

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