Invoice factoring takes two main forms – Factoring and Invoice Discounting

Invoice Factoring can give your business access to cash that otherwise would be tied up, this can help to maintain your cash flow and help you manage your business more successfully.

Factoring works by immediately giving you access to the money owed to you from outstanding customer invoices.

The Factoring Company will release a percentage of the invoice total to you upon receipt of the invoice and they will collect the outstanding money on your behalf. Once the invoice has been paid by the customer they will release the balance to you minus their small fee.  This means that you can focus on running your business without having to chase debts.

Invoice Discounting works in a similar way to factoring, invoices are still submitted to the factoring company, the difference being that you continue to have control over your collection of outstanding invoices.

A percentage of the total invoice submitted is released to you, usually within 24 hours of receipt.  The balance will be paid minus a small fee once it is confirmed that the customer has settled the invoice.

Invoice Discounting is a good option for companies who wish to retain control of their collection systems without having their cash flow tied up.