Invoice finance explained
Invoice discounting... factoring... perhaps you use one of these services already? Or maybe you are just thinking about it? Either way, how do you know what is right for you and for your business? Let's look at each one in turn.
Factoring
Factoring is more commonly used by companies who are growing but who don't yet have the resources to administer their sales ledger or to spend time chasing debtors. It's a flexible credit control system that offers funding directly linked to your outstanding sales invoices. So you can draw down capital as and when you need it.
Here's a quick run-down of what factoring includes:
- Prepayments of up to 95% of invoice value
- Credit control service to support and manage invoice collection and payment
- Optional bad debt protection
Invoice discounting
Invoice discounting is actually very similar to factoring but with added advantages. The main one being that it gives you full control over your sales ledger, credit control and collection activities.
It's suitable for everyone from younger, growing companies right through to established, profitable ones. And it gives a fast, flexible and cost effective solution to cash flow management with very little administration.
Here's a quick guide to what invoice discounting offers:
- Prepayment of up to 95% of invoice value
- Responsibility for your own credit control management
- Optional bad debt protection, and
- Choice of complete confidentiality so your customers are not aware that you are using the service
Indeed, many companies prefer invoice discounting to factoring. It allows complete control of your sales ledger collection and, most importantly, your customer relationships.
IDeal
IDeal takes all the benefits of invoice discounting one step further – by completely removing the need for labour intensive, month end reconciliation processes so it saves you time, effort and money. But why not discover for yourself how effective IDeal is.