Late Payments and Invoice Discounting Blog

Late Payments and Invoice Discounting Blog

For many businesses, poor cash flow is a sticking point of the organisation. Instead of worrying about where the next source of income is coming from, invoice discounting can help to unlock the money that is yours but currently tied up in invoices. So, is unlocking revenue and improving cash flow right for your business?

What is invoice discounting?

Invoice discounting (ID) is the process of selling your invoices to a third-party provider. The provider will then release funds from your invoices, usually between 75%-80% of the value of the invoice. Once your customer has paid the invoice, the provider will then send you the remainder of the outstanding invoice, minus a small fee for their processing.

With invoice discounting, you can enjoy complete control over which invoices and debtors you want to pass on to your providers. You do not need to use the provider all the time or for specific debtors. Instead, you choose when you require an upfront payment to suit your cash flow at the time.

Is invoice discounting right for me and my business?
Most providers will ask that you are a UK limited company. However, aside from that, ID is available to many businesses who have several debtors operating on credit terms. If your business needs to improve cash flow and manage debtors more effectively in line with your business plans, then this service could be the versatile working capital facility that your business needs.

How could flexible invoice discounting help my business?

1. Quick Payment

The obvious advantage of ID is the fact that instead of waiting for an invoice to be paid by your clients, you can receive payment almost immediately. Typically, providers will process invoices and release funds within 48 hours.

2. Boost growth, without debt

With Invoice Discounting, you do not need to acquire any debt; you are simply speeding up the invoice process. This enables your business to boost growth with available cash flow without the stress and pressure of debt.

3. Flexibility

Whatever your situation, you remain in control of your invoices. If your cash flow is healthy, then you may not need to allocate invoices to your provider. However, if cash flow is poor, then you can send more invoices to your provider to boost your capital. The flexibility is a significant advantage for long-term financial support without the burden of debt.

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Categories: Invoice Finance Services