Invoice Factoring and Invoice Discounting Come To The Rescue As Overdrafts Fail

In Annual Credit Reports of Advisor (May 8, 2009 7:28 am)

The business overdraft is progressively losing ground as a first choice of company funding to new and more flexible rivals such as Debt Factoring and Confidential Invoice Discounting which form part of the asset based lending sector. Invoice finance has been around for more than 40 years, but recent growth has been rampant.

Confidential Invoice Discounting can help companies manage cash flow, expand their business, purchase new equipment and stock, conduct a management buy-out or buy in, or even merge with or acquire a new company. For many companies, their sales ledger can be the largest asset on the balance sheet, often representing two or three months’ worth of sales.

Confidential Invoice Discounting also allows companies to boost your working capital by raising finance on the value of their outstanding invoices. Again, companies get between 80 and 85 per cent of the invoice value, and the remainder when the customer pays.

The key difference between Confidential Invoice Discounting and factoring is that the company retains control of the sales ledger and collections process, which means the service isn’t disclosed to customers. That makes it cheaper than Debt Factoring, often costing less than one per cent of turnover, plus interest, and is much more popular.

A number of companies now offer the choice of fixed-fee invoice discounting. Companies with a turnover of more than

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