Invoice discounting is an alternative funding solution which gives businesses access to cash tied up in unpaid invoices. Using an invoice discounting facility allows a company to borrow money using their raised invoices as proof that they will be able to afford repayment.
When using invoice discounting, a company receives a percentage of the value of their raised invoice from their lender in advance. The company liaises with their customer to arrange payment and, once the invoice has been settled, they are paid the remaining amount minus an agreed fee.
What are the benefits of invoice discounting?
Invoice discounting allows companies to quickly access funds they are owed. Once approved, invoiced money can be available to a business as soon as they raise the bill with their client. This immediacy and flexibility allows businesses to improve cashflow and meet their ambitions.
This type of funding also allows businesses to keep control of invoice collections and keep financing methods entirely confidential. Companies using invoice discounting continue to employ their own credit control methods and, as a result, need not disclose to clients that they are using invoice discounting.
By using owed invoices as security, businesses can be confident that they will not outgrow their funding pot or borrow beyond their means. The credit available is directly linked to the value of a company’s sale ledger, and increases (or decreases) as invoices are raised.
Is invoice discounting suitable for me?
Invoice discounting is suitable for business to business companies who want to manage their own credit control. Close Brothers Invoice Finance works with a range of different sectors and assess companies on an individual basis, so it may be helpful to contact us to discuss your options.
There are a variety of reasons that companies choose to use invoice finance, such as late payments or trading expansion. For example, we recently secured an invoice discounting facility for a recruitment agency that required funding to complete an acquisition. The company was a well-established, profitable business, with an annual turnover of over £500,000, and we were able to provide the full funding they needed using our unique invoice discounting product.
What does Close Brothers Invoice Finance offer?
Working with a partner like Close Brothers has many benefits. We can unlock up to 90% of the value of your unpaid invoices, give you access to your money within 24 hours of invoices being raised, and support your business with a personal client manager.
All of our invoice discounting clients can use our award-winning platform, IDeal™. This reliable software processes invoices as soon as they are raised so that you are paid instantly, and gives you an easy way to access information about your account. IDeal™ links to many accountancy software packages, and can help you to reconcile your invoices, saving you time and money.
Our aim is to find a funding solution which will allow your company to achieve its goals. We assess each business by its individual merits and work hard to understand our clients so we can provide a personalised service for you.