Types of Invoice Finance
Invoice Discounting
Your invoice discounting provider will make funds available as a percentage (normally 75-90%) of your outstanding (and eligible) sales ledger. Once your client pays, the remaining balance of the invoice is available for you to withdraw. Invoice discounting can be done on a disclosed (your debtors know you have a financier) or confidential basis.
Invoice Factoring
Factoring is the old school of invoice finance. The lender will make funds available to drawdown against your entire sales ledger. Unlike Invoice discounting, the lender is closely involved with the collection of your debts. The lender will monitor your ledger closely and provide credit control to ensure customers pay on time.
Selective Invoice Financing
Probably the most flexible (and as such, costly) of the invoice finance products. Selective invoice finance does not involve an agreement over the entire sales ledger, rather, over a selection of invoices. This means that the borrower can choose which invoices to advance against. This means you keep control and have flexibility to adjust your cash flow when you needed.
