Invoice Discounting and Factoring – What’s the Difference?

Invoice Factoring company Uk simply factoring brokers

When invoicing isn’t your business, it’s easy to get confused by jargon. But as all businesses rely on income it pays to know about factoring.

Invoice discounting and invoice factoring are two terms that often confuse people so, if you’d like a quick explanation, read on!

Invoice Factoring

Invoice factoring is selling your invoices to a factoring company. You know how the story goes. You sell a product or service; send off the invoice and then…nothing. Sometimes you wait for weeks or, in many cases, months before your customer settles invoices.

Even when agree payment terms before any work and despite though the Late Payment Act requires clients to pay up within 30 days, businesses are often wait far beyond this deadline.invoices paid quickly by invoice factoring

Imagine, sending an invoice and have the money reach your account in a matter of hours. Well, that is pretty much what happens with invoice factoring. The factoring company will provide you with between 80 and 90% of the invoice total immediately. They also take over the responsibility and hassle of chasing the payment, taking a percentage of the final payment as their fee when the invoice is finally paid.

An independent invoice factoring broker like Simply Factoring Brokers, will find the right deal for you. Instead of calling around a number of invoice factoring firms, explaining your situation each time, we do all the legwork and come up with the best deal. All you have to do then is send your invoice to the factoring firm we recommend – and take your money!

Invoice Discounting

Invoice discounting, on the other hand, is a form of short-term borrowing with the aim of strengthening your cashflow position.

Your business might have taken on a big contract but isn’t able to invoice the client until the project is completely finished. You know that a significant sum of money is on the way – but need the finance to meet commitments until the payment reaches your account.

At Simply Factoring Brokers, we are in contact with the leading UK discounting firms, who can supply up to 90% of the invoice as finance until that invoice is paid. After a five-minute chat to get the right information about your business, we will select a preferential deal for you at the best rates, equipping your business to focus on growth.

A key way in which invoice discounting differs from invoice factoring is that you to chase the customer for payment from your client. This must be paid into a dedicated account, after which the invoice discounting firm will release the remaining percentage of the funds to you, minus a small fee.

Invoice discounting is a way of confidentially using an invoice finance facility, ensuring that your debtors have no idea you are using a discounting broker. For more information on any invoicing matters, call Simply Factoring Brokers on 0330 1342 826 and let us take your worries away!

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