Invoice Finance

If your business is large enough to manage and collect outstanding invoices efficiently using in-house staff and information systems, you may want to consider invoice finance through invoice discounting rather than a factoring service. It is similar to factoring, except you retain control of sales ledger management and collection responsibilities. The provider does not disclose the service to your customers.

There are two costs:

An administration charge, either a flat fee or a percentage of turnover and

An interest charge for the cash advances.

Rule of thumb: if your business has an annual turnover of more than £million and an own accounting system, you may want to look at invoice discounting over factoring – however every business is different and you may still be more interested in factoring.

Almost all invoice factors will offer an invoice discounting service but some of the smaller factors may have limits to what they will underwrite.