How Invoice Discounting Can boost Your Cashflow

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You can ring us on 0845 094 4439 during office hours (Monday to Friday 9.00am to 5.00pm) or out of office hours on 07801 858 737. Alternatively you can or

Some of the companies we work with
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What is it?
Invoice discounting enables a business to engage a company, usually a bank or other finance house, which allows them to borrow money on a short-term basis, using the value of outstanding invoices as security. Running a business is never easy; many businesses fail because they do not have enough working capital or cash flow to make the business viable. Invoices for work done or goods supplied are issued to customers, who pay, but seldom in the timescale requested (usually 30 days). Many businesses need the money immediately and invoice discounting is a simple, and straightforward mechanism for raising finance. The Asset Based Finance Association, released figures, in 2010, showing that in the previous year UK firms had raised £179.9 Billion through invoice discounting.

How does it work?
Invoice discounting is similar to the invoice factoring process; the financier releases a percentage of the value of the invoice within twenty-four hours of it being raised. At between 80% and 90%, the percentage made available differs little between discounting and factoring. In the recruitment industry, some financiers are prepared to release 100% of the invoice value; although this is unusual. The process invoice discounting process is as follows: There are certain circumstances when invoice financiers may be unwilling to advance money, these include cases where:

Advantages of invoice discounting
There are several advantages to invoice discounting, including;

Disadvantages of invoice discounting include:

What type of company is finance discounting aimed at?
Usually, a company will have an annual turnover in excess of £750,000 in order to be able to set-up an invoice discounting arrangement, although this varies from one provider to another. Additionally, financiers will expect any company wishing to engage their services to already operate established and effective systems for invoice, sales and ledger, and credit management; the financer is likely to want to review these aspects of their client’s business on a regular basis. If your turnover is less than this invoice factoring may be a more suitable solution.

How do I find it?
A company, which meets the above criteria, and which wants to set-up an invoice discounting arrangement will need to search the market to find a provider that can meet their needs. It is always a good idea to take professional advice before entering into a commercial agreement. In particular, the company should find a finance company prepared to offer it a total invoice financing limit that meets its needs, and achieves its intended goals in terms of working capital and cash flow.

What does it cost?
This will vary depending upon the provider you choose, and will be based on several factors such as your trading history, industry type, invoice values and turnover. This is why it is so important for us to look at many providers in order to find you the best deal.

Alternatively, have you considered Invoice Factoring?
With invoice factoring someone else takes over your billing process, chasing slow payers and handling credit contol. This means that your customers are aware that you are using a factoring facility.

Ring us now! 0845 094 4439

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We are Factoring and Invoice Discounting Limited, of 4 The Stables, Wilmslow Road, Didsbury, Manchester M20 5PG. Registered in England number 08310845.
Telephone number: O845 O94 4439 (5 lines).

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