Would invoice discounting provide ready cash for my business? If you need a rapid solution to your cash flow problem, invoicing discounting could help
Unfortunately, predicting the amount of customers you’re likely to get and when they’re going to pay you can be difficult. Periodically, almost every business finds that they need to buy fresh materials or pay their staff at the same time as having a number of invoices outstanding. This can lead to problems with cash flow, which is where invoice discounting companies can help.
Invoice discounting is an advance against the money you are going to receive when your customers pay you. A lender will let you borrow a percentage of the money owed; you will pay it back when your customers pay up, along with a service charge. Unlike factoring, you usually retain full control of the invoices; they still belong to you and are subject to your collection procedures.
The amount lenders are likely to offer depends on the value of your invoices, the turnover of your business and other factors which affect the level of risk. For successful businesses that require a quick injection of working capital, invoice discounting could be an option.