Glossary

A way of unlocking cash tied up in unpaid customer invoices instead of waiting for customers to pay.

You borrow against unpaid invoices but keep control of your customer relationships and collections.

Invoice finance is the overall term for funding solutions that release cash from unpaid customer invoices. Invoice factoring and invoice discounting are two types of invoice finance. With invoice factoring, a finance provider advances cash against your invoices and also manages the collection of payments from your customers. With invoice discounting, a finance provider advances cash against your invoices but you retain control of customer relationships and collect payments yourself, usually on a confidential basis.

A form of invoice discounting where customers are not aware a finance provider is involved.

Funding only specific invoices rather than your entire sales ledger.

A request for payment sent to a customer after goods or services are supplied.

Your customer who owes payment on an invoice.

An invoice that meets lender rules and can be funded.

An invoice that does not meet funding criteria, such as being too old or disputed.

The percentage of an invoice paid to you upfront, often up to around 90%.

The initial cash payment you receive against an invoice.

The portion of the invoice value held back until the invoice is paid.

The total amount you can currently draw from your invoice finance facility.

The remaining balance paid to you after the customer settles the invoice, minus fees.

The regular fee charged for managing the invoice finance facility.

The charge for accessing money early against your invoices.

The minimum amount charged each month, regardless of usage.

The process of chasing and collecting payments from customers.

The maximum amount a lender will fund against a specific customer.

The level of reliance on one or a small number of customers.

Optional cover that protects you if a customer cannot pay.

A record of all invoices issued and payments received.

Checks carried out to confirm invoices are valid before funding.

Matching customer payments to the correct invoices.

Payments received that have not yet been matched to invoices.

The legal transfer of the right to collect invoice payments.

Formal notification to customers that invoices are assigned to a funder.

Your responsibility to repay funds if an invoice is unpaid.

Funding where the lender takes the risk of customer non-payment.

Faster access to cash to pay suppliers, staff, or invest in growth.

Funding grows as your invoicing increases.

Reduced time spent waiting for or chasing payments.