Funding, you keep control

Invoice discounting: the funding, without the visibility.

Invoice discounting releases working capital against your unpaid invoices while you carry on collecting payments yourself. Where a provider agrees, the facility can be confidential, so your customers see no change.

Discuss your options How it works

Initial discussionNo obligationIndependent broker guidance

Discounting facility — illustrative

Ledger uploaded

£412k

Availability

£330k

Drawn

£190k

Availability, last 8 weeks

Illustrative only. Every facility is priced and structured by the provider.

Confidential

Customers pay you as normal

Credit control

Retained by your business

Customer awareness

Often confidential

Often suits

Established firms with robust systems

Typical requirement

Reliable ledger management

What it is

What discounting actually is

Invoice discounting works on the same principle as factoring: a proportion of your unpaid invoices is advanced to you, with the balance following when the customer pays. The key difference is who does the collecting. With discounting, that stays with you.

Your customers continue to pay into a designated account and your team chases payment as normal. Because the provider is not in contact with your customers, many discounting facilities can operate confidentially. Confidentiality is at the provider's discretion and depends on their assessment of your systems and controls.

Discounting tends to suit businesses that already run credit control competently and simply want a source of working capital that expands with the ledger.

In brief

You retain credit control and customer contact

Can be confidential, subject to provider criteria

Often suits established firms with sound processes

How it works

Discounting step by step

Invoice as normal

You raise invoices and send them to customers with no change to your usual process.

Upload your ledger

You submit invoice details to the provider, typically through an online platform, and draw the funds you need against them.

You collect payment

Your credit control team follows up and customers pay into a nominated account.

Availability refreshes

As invoices are settled, the funds advanced against them are repaid and availability is recalculated against new invoices.

Who it suits

Businesses this tends to fit

Often suits

Businesses with an established credit control function
Companies that prefer customers not to know funding is in place
Firms with good systems, reporting and ledger discipline
Larger or more mature businesses seeking flexible working capital
Businesses looking to move on from a factoring facility they have outgrown

Typical eligibility

A functioning credit control process with reasonable collection performance
Accurate, regularly reconciled sales ledger
Ability to provide the reporting the provider requires
A spread of creditworthy business customers

Advantages

You stay in front of your customers

Relationships and collections remain with your own team, with no third party involved in the conversation.

Confidential where available

Subject to the provider's criteria, the facility can operate without customers being notified.

Generally lower service fees

Because the provider is not running collections, service charges tend to be lower than for a comparable factoring facility.

Scales with turnover

Availability is driven by your ledger, so a growing business can typically draw more as it invoices more.

Things to weigh up

Higher expectations of your systems

Providers will want confidence that your ledger is accurate and that collections are managed well. Reporting requirements are usually more involved than with factoring.

You still carry the collections workload

The time and cost of chasing payment remain with you. If that is a strain, factoring may be a better fit.

Availability may not be universal

Confidential discounting is not offered to every business. Provider criteria vary, and a broker can help identify where your profile is likely to be well received.

The other forms it takes

The umbrella term

Invoice Finance

A way for businesses that sell on credit terms to access a proportion of the value of unpaid invoices before customers pay.

Invoice finance explained

Funding plus collections

Invoice Factoring

Release cash against unpaid invoices while the provider manages credit control and collects payment from your customers.

How factoring works

Fund what you choose

Selective Invoice Finance

Finance individual invoices or specific customers as the need arises, rather than committing your whole sales ledger.

How selective finance works

Questions

Discounting questions, answered straight

Is invoice discounting always confidential?

No. Confidential invoice discounting is available from many providers, but it is subject to their assessment of your business. Some facilities are disclosed, and some businesses are offered factoring first and move to confidential discounting later.

What reporting will I need to provide?

Typically a regular ledger upload, reconciliations and management information. The precise requirements vary by provider. We will make sure you know what is expected before you commit.

Can a smaller business get invoice discounting?

Possibly. Provider appetite depends more on the quality of your processes and debtors than on size alone, though some providers do set minimum turnover levels. If discounting is not available initially, a factoring facility can be a stepping stone.

How is discounting different from an overdraft?

An overdraft is a fixed limit set by the bank and can be withdrawn. Discounting availability is linked to your sales ledger, so it tends to rise as your invoicing grows. Many businesses use it as a more scalable alternative or complement to an overdraft.