Invoice discounting is like factoring, in the sense that it allows you to immediately acquire the bulk of the money that you are owed from unpaid invoices, before they are actually paid.  The difference from factoring is that invoice discounting is totally confidential, meaning that your client or customer will have no idea that this service is being performed.  They will think that they are paying straight to your business account whereas in fact they will be paying to the provider of your invoice discounting.  When this happens, the rest of what you are owed from the invoice, with their fee already taken out, will then be passed on to your company.  This means that you can improve cash flow without advertising to anyone that you might be having any difficulties.

Benefits of Invoice Discounting

The benefits of invoice discounting are quite simply the benefits that you get from an increased cash flow.  In an ideal world it would not be necessary because your customers or clients would immediately pay for the services rendered.  However, it is rare to find a company in the business world that has not faced difficulties due the slow payment of invoices.  It is hardly necessary to explain what difficulties this can lead to but in the most extreme of them it could even mean that the company goes out of business.  The particularly unfortunate thing about this is that it is totally unnecessary when factoring or invoice discounting is available.
Instead of going bankrupt however, in most cases companies will merely take out a loan with a bank to cover them until the unpaid invoice has been recuperated.  This will usually mean having to sacrifice equity, and of course it takes time to negotiate the loan with the bank.  The benefit of invoice discounting in this regard is that what you are dealing with essentially is your own money, even though technically it is a short term commercial loan.  There is a small fee to be paid for this service, but you will be able to get as much as 90% of the amount quoted in the invoice immediately, and the rest minus the fee after the invoice has been paid.  This means any capital injections you may wish to make can be done with what is essentially your own funds rather than relying on a bank. 

If you are worried about the possibility that the customer or client will never actually pay the invoice, then you can also acquire bad debt protection.  This will give you extra peace of mind, and makes invoice discounting the next best thing to actually having near perfect cash flow.

Why Commercial Finance?

Instead of using the expertise of a commercial loan broker like Commercial Finance instead you could try to find a provider of invoice discounting directly.  However, should you do that, you would miss out on the contacts we have built up in a comprehensive network of private and commercial lenders.  This would mean that you be unlikely to find the best deal that you could have done, and it would perhaps also not be the best way to utilise your company's time.  On the other hand, taking advantage of Commercial Finance, our advisers will be dedicated to acquiring the best deal for you, knowing that we only get paid when you are happy with one of the deals that we find for you.

To find out more, get an immediate contact from your personal advisor using the contact form.