Invoice Discounting

Invoice Discounting solves this problem. Invoice discounting is a financial arrangement where a company uses its unpaid invoices as collateral to obtain a short-term loan from a lender. This allows the company to access cash quickly without waiting for customers to pay their invoices.

Essentially, the lender advances a percentage of the invoice value, typically around 80-90%, and the company retains control over the sales ledger and customer relationships. Once the invoices are paid by the customers, the company receives the remaining balance, minus any fees or interest charged by the lender.

This method helps businesses manage cash flow and continue operations smoothly while waiting for payments.

The Benefits to you are:

• No more cash flow headaches, leaving you free to concentrate on growing your business.
• Receive cash on delivery but still give your customers the credit terms they have always enjoyed
• Improve your return on capital invested.

The service costs are divided into two areas:

• Service charge and low interest loan.
• Most companies find the finance costs less than a normal overdraft.
• It depends entirely on your individual requirements and the workload involved.
• As a guide, the service charge for invoice discounting would be in the range 0.2% to 0.7% of annual turnover.
• The finance would be around 2% to 2.5% over base rate.