Invoice discounting works in a similar way to factoring, only your customer will have no idea that a third party finance company is involved. Invoice Discounting is more suitable for larger companies with an annual turnover of over £500,000 and who have a credit control function of their own. In the same way as factoring, invoice discounting allows you to inject cash flow without having to sacrifice equity, or deal with a bank.
Here’s how it works:
Once you have delivered the goods to your customer, you send them an invoice for the payment on your own company stationary, and forward the invoice to the finance company. Before the customer has even paid the invoice, you will receive up to 90% of the balance immediately. The credit controller of your company will then secure the payment from your customer, which is then paid into your client account with the finance company. The finance company will then send you the remaining 10% of the balance, less their fee.
Invoice discounting differs from normal factoring in that the customer only receives communication from you, and therefore has no idea that a finance company is involved. This allows you to benefit from not having to wait 30, 60 or 90 days for the payment and it is this point that makes invoice discounting so attractive to businesses.
If you would like further details please do not hesitate to contact us on 0800 612 7729 or fill in a few details on enquiry form and have one of the Leapfrog Finance Advisors call you back, alternatively, email us at Enquiry@leapfrogfinance.co.uk