Glenn Blackman | Invoice Finance, Factoring & Invoice Discounting

One of the businesses I am involved with, Cashflow Acceleration Ltd, also provides a free, independent quotation search service for invoice discounting. Invoice discounting is a business finance product that can significantly improve the cash flow of a business by providing finance against unpaid sales invoices.

Unlike factoring it allows you to retain full control of your credit control function and it can be totally confidential so that your customers don’t know you are using the service.

Here is a short summary of how invoice discounting works:

Invoice Discounting works as follows:

1. The business provides day-book listings of invoices they have raised to the invoice discounting company (aka the discounter) - this can be done electroncially.
2. The discounter provides an initial payment of up to 95% against the invoices.
3. The business retains the task of credit control and chases the debtors for payment when the invoices fall due and the arrangement can be completely confidential so the debtors are unaware.
4. The debtors pay into a bank account called the “trust account” set up in the business’ name but the account is controlled by the discounter (hence the debtors don’t know the business is using a confidential invoice discounting arrangement.
5. The balance of the invoice, less charges, is passed to the business when the debtor settles the invoice and the funds have been paid into the trust account.
6. As new invoices are raised so the cycle is repeated and more funds are released to the business improving its cash flow through invoice discounting.

Watch our video: How Invoice Discounting Works

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