Every business that is growing will encounter the fact that unpaid invoices will start to impede its progress at some point. This is a time where invoice discounting may be able to help. It allows companies to access working capital without having to wait for their customers to pay, which may take 30, 60 or even 90 days. For both established businesses and smaller businesses in need of improved cash flow, invoice discounting could be the solution for you to improve or smoothen out your operations and improve your growth possibilities.
This guide will provide answers to what is invoice discounting, in what context it may be suitable for, and will also provide comparisons of small business factoring and factoring & trade finance solutions.
What Is Invoice Discounting and How Does It Work?
The first step to making more informed funding decisions is understanding what invoice discounting is. At its most basic, invoice discounting allows businesses to borrow against the value of their outstanding customer invoices. You still manage your own sales ledger and collections and get 90% or more of the value of the invoice upfront.
| Benefit | Description |
| Quick access to funds | Receive cash within 24–48 hours |
| Confidentiality | Customers aren’t notified of the financial arrangement |
| Scalable with sales | Finance grows as your invoice volume increases |
| Retain control | Your team handles credit control and collections |
This is often a confidential service which means your customers might not even know that you are using a financial service. Once invoices are paid, you pay back the lender, minus a small service fee. This allows you to maintain customer relationships while improving liquidity. Unlike loans or overdrafts, invoice discounting increases in line with your sales – giving you greater flexibility and more options for growing businesses.
Ideal for Established Businesses with Steady Invoice Cycles
Although invoice discounting can benefit all types of businesses, it is much better suited for established businesses with track records and stable credit control processes. Established businesses that regularly invoice their dependable customers and have reliable, extensive financial reports are perfect candidates for invoice discounting.
Why? Because lenders are happy to lend to these businesses because they have a lower perceived risk, which translates into better terms.
- Ideal for companies issuing B2B invoices
- Unlocks working capital quickly
- Maintains customer relationships
- Adapts with seasonal sales
- Offers flexible repayment terms
We routinely deal with established businesses in all industries – even if you’re in manufacturing, wholesale, or a professional service, and we can help you arrange the best invoice discounting options for your business. As established lenders with a panel of trusted lenders, we can provide competitive quotes, fast quotes that match your business.
Small Business Factoring vs Invoice Discounting: What’s the Difference?
Employment factored financing routes the control of credit and collections to the finance provider which, again, makes sense for novice businesses who don’t want to give their time and overhead space away to these functions, but it does not offer confidentiality as it’s clear to your customers that someone else is taking care of payments.
Control and Confidentiality
- Invoice Discounting: Business retains control over collections and maintains confidentiality.
- Small Business Factoring: Third-party collects payments; customers are aware of the involvement.
Suitability
- Small Business Factoring is often better for startups with minimal in-house financial management.
- Invoice Discounting is suited for mature companies with stable sales and accounting systems.
Support at Every Stage of Growth
- First-Time Factoring Clients
If you’re new to invoice finance and need to factor your debt for the first time, Simply Factoring Brokers offers step-by-step guidance. - Mature Businesses Seeking Control
Ready to move to invoice discounting? We’ll help you upgrade your funding approach—matching you with solutions.
Invoice discounting routes credit control back to the client and maintains good relationships with clients. For small businesses, there is sometimes an easy transition from factored debt to invoice discounting once the small business gains some maturity.
Simply Factoring Brokers will help you and guide you best to a suitable funding fit for your situation regardless of how small those factoring arrangements might be.
Factoring & Trade: Broader Solutions for Supply Chain Finance
Factoring & trade finance extends beyond invoice finance. Factoring and trade finance is a product that supports businesses that import, export or operate complex supply chains. Trade finance aids an organization in paying suppliers while you await customers to repay invoices; it keeps your business moving.
Companies that operate globally tend to combine factoring & trade finance together. If your company endures long payment cycles or a varying timeline for complete deliveries, the use of combined services could improve your working capital and your negotiation strength with suppliers.
Whether your business is moving in the direction of invoice discounting, factoring & trade or combination of both, at Simply Factoring Brokers.
Why Choose Simply Factoring Brokers for Invoice Discounting?
At simply factoring brokers we know that no two businesses are the same, which is why we provide recommendations guided by your cash flow, volume of invoices, customer profiles, and financial objectives.
Rather than solely providing insights on what is invoice discounting, we help put you in touch with the right lender and support through your entire journey. Our experts can help you understand your funding options and with avoiding pitfalls and making financial decisions.
Resolution
Invoice discounting is not merely a financial product—it’s a method for business growth. It frees up cash that is tied up in unpaid invoices, enabling you to invest back into your operations, sign a new contract, or onboard new talent without waiting for your slow-paying customers. Moreover, for an established business, it represents a discreet and flexible funding solution. And, for a growing business, it represents the first step to larger finance solutions, such as factoring & trade.
Get in touch with Simply Factoring Brokers today to learn how we can help you find the right funding to keep your business moving forward.