what are debt factoring and invoice discounting | click to expand |
With Factoring & Invoice Discounting you receive up to 95% of the value of your invoices immediately instead of waiting to be paid by your customers. You pay a small fee to the factoring company for this up front finance but also receive a large number of other services which save you money. The different types (describe below) allow you to choose between using the additional services of the company (factoring) or retain more control over managing your invoices / pay less in fees (invoice discounting). With invoice discounting you can also choose whether you want your customers are informed that you are using the service or not. Factoring / invoice discounting have many advantages over and above the finance aspect which result in substanital cost savings to the business and are explained fully on this site. Additionally the ffinance itself is also normally easier to obtain than other forms of finance as it is the credit worthiness of customers on which the finanace is based and not your comany. This is one of the advantages as finance can be secured without risking valuable business assets as collateral.
- Debt Factoring (Non-Recourse)
- Debt Factoring (Recourse)
- Invoice Discounting (Confidential)
- Invoice Discounting (Disclosed)
- Video
With Factoring you receive Finance (up to 95% of the value of your invoices) and services (sales ledger administration, debt collection and debt protection). Non recourse-Factoring refers specifically to factoring that includes debt protection
The Debt Factoring Company
Pay up to 95% the value of your invoice | Protect you from bad debts | ||
Manage your sales ledger for you | Collect payments for you | ||
Grow with your business | No constantly renegotiating loans / overdrafts | ||
Easy to forcast & calculate costs | Provide huge savings |
Recourse Factoring is the same as non recourse factoring except that you do not receive bad debt protection and so have a lower service charge
Offer lower service charges | No bad debt protection |
With Invoice Discounting you still receive the finance, but manage your sales ledger, collections, credit control and bad debts (optionally) in return for a very low service charge (around 0.5%). Confidential means your customers are not told you are using an invoice discounting facility.
With Invoice Discounting you manage your sales ledger, collections, credit control and (optionally) bad debts in return for a very low service charge (around 0.5%).
Pay up to 96% The value of your invoices | Very Low service fees (0.5 - 1.5%) | ||
You manage your sales ledger | You manage your collections | ||
Bad debt protection ( for added service fee) | Confidentiality about using Invoice Discounting | ||
Grow with your business | No constantly renegotiating loans / overdrafts | ||
Easy to forcast & calculate costs | Provide huge cost savings | ||
Our quotes include award winning companies that have unique and industry leading systems that enable much less stringent criteria for obtaining invoice discounting. |
Invoice discounting can be harder to obtain as the debt factoring company is reliant on your companies ability to professionally manage the sales ledger.
Disclosed invoice discounting just means customers made aware that you are using an invoice discounting facility.
Customers not told you are using invoice discounting. |
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The Costs of Factoring & Invoice Discounting | click to expand |
This is a typical example of the fees that you will pay and the finance you receive. It is based on a turnover of £1 million, but feel free to put in your actual turnover for an estimate of your costs / payments. You can move the sliders and by putting in the values from your free quotations, (which you will receive when you fill out our factoring / invoice discounting quotation form at the top of this page). This way you have an easy way to compare it to other forms of finance. Finally don't forget to estimate the potential savings (below) as well as the costs by using our easy to use interactive charts. Full explanations of each term is given, by rolling over the terms below.
IMPORTANT:- Your INTEREST FEE will be much LOWER if you don't use all your advance payment at once. YOU ONLY PAY INTEREST ON WHAT YOU USE (like an overdraft facility).
IMPORTANT:- SERVICE FEES are much LOWER with invoice discounting (as you receive less services).
The Savings of Factoring & Invoice Discounting | click to expand |
This is a typical example of the savings that you could make, based on a turnover of £1 million. Full explanations of each saving is given by rolling over the terms below.
Debt Collection Admin & Expenses | Credit Control Admin & Expenses | Open Item Accounting | Debtor Days Reductions | Interest Savings
Glossary | click to expand |
H2 level heading
With Factoring your customer invoices are sold to a factoring company in exchange for finance and services (although there are significant added benefits & cost savings as well). With invoice discounting, again you receive money for your invoices but you manage your sales ledger and so it is slightly cheaper (you are literally just paying for finance like an overdraft, but again with significant added benefits & cost savings).