Invoice Discounting

Invoice discounting is similar to factoring finance, but instead of selling the invoices outright, businesses borrow against the value of their invoices. This means that businesses retain ownership of the invoices and continue to manage their customer relationships. The financier advances a percentage of the invoice value upfront and then collects the payment from the customer when the invoice becomes due.

One of the main advantages of invoice discounting is that it allows businesses to maintain control over their customer relationships. It can also be more cost-effective than factoring finance, as the discount rate is typically lower. However, invoice discounting may not be suitable for businesses with a weak credit rating or a low volume of invoices.