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What is invoice discounting?
This confidential financing option can boost your cash flow immediately by injecting cash against the value of your outstanding invoices within 24 hours. We know that for some businesses, confidentiality is key and we respect your privacy when speaking to funders on your behalf to find the facility, which will benefit your business now and in the future.
Invoice discounting could be the perfect solution if you sell products and/or services on credit terms to other businesses and you want to deal directly with your clients. For businesses with higher turnovers and good client relationships, the confidentiality is a great benefit allowing credit control and responsibility for the sales ledger to stay with the business.
Book debts can be the greatest asset on a balance sheet for some businesses but they can become a problem when they turn into cash more slowly than anticipated, potentially leading to a shortage, hampering business expansion and day to day payment affordability. Invoice discounting addresses this by providing up to 90% of an invoice, ensuring cash is available to your business when you need it.
How will invoice discounting work for my business?
When your lender receives a copy of the invoice you have raised against your customer, they will pay you up to 90% of the invoice value within 24 hours, enabling you to meet your liabilities and stabilise your cash flow.
Unlike factoring, you remain responsible for credit control and the relationship with your customers. When your customer pays you, the money will go into a trust account provided by your lender and you receive the remaining value of your invoice, minus your lender’s fees.
Invoice discounting is suitable for B2B businesses with a proven track record that are turning a profit and have an established credit control team to chase payments. Some exceptions may be made but there are other options available, such as factoring and single invoice/spot factoring. If this financing facility does not fit; get in touch with us and we will look into the options available to your business.
Why should I consider invoice discounting for my business?
To make invoice discounting successful for your business, we work hard to find a lender who will be able to offer your business:
- Helping you manage slow-paying customers –By providing you with cash within 24 hours.
- The ability to look after your important customers – Steady cash flow provides you with the opportunity to give valued customers extended credit, increasing their chances of buying from you and strengthening your working relationship.
- Working capital –Cash on hand ensures suppliers are paid on time reducing the likelihood of late payment charges against you, preserving your credit rating and putting you on more favourable terms with suppliers.
- Protection against bad debt losses – You have the option of insurance against bad debts, so if a customer defaults, your lender absorbs the cost rather than your business.
- Confidentiality, control and flexibility – Your customers are not usually aware that you are using a financing facility and you will also retain complete control over your sales ledger management.
- Capacity to grow – Invoice discounting is great for growing businesses. The more invoices you issue the more cash is available to fund expansion. It grows with your business so there is no need to constantly renegotiate increased facilities.
Are there any risks associated with invoice discounting?
- Overdue payments – If your customer defaults the factoring company can “clawback” the money they have advanced. To avoid this situation consider a ‘non-recourse’ facility which effectively insures the payment.
- The spread of your customers – Factoring companies prefer to spread their risks, so an over-reliance on a couple of large invoices could be an issue. This is known as a concentration which may result in the lender advancing a smaller percentage of your ledger value.
- Debentures – A factoring company’s main item of security will be a debenture which will be registered at Companies House. This would be revealed to anybody undertaking a search at Companies House.
So if you want to get your cash flow back on track and retain control over your credit facility, invoice discounting could be the right option for you. Call us now for further information or to get your free, no obligation quote.
Some of the partners we work with...
From a funders perspective, I find that the team at WF Financial Solutions, really take the time to understand the customers’ needs and wants and with their vast experience are able to match them with the correct funders. This really helps the funders to build a fast and trustworthy relationship to ensure any facilities are provided in a timely manner.
- Wayne Spratt, Business Development Manager, Bibby Factors Yorkshire
Why choose us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through a range of lenders and their varying services and we are proud to offer advisory and introductory services to finance providers that suit your needs.
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