invoice discounting

A confidential facility.

The roots of the facility lie with Factoring in as much as the facility is cashflow linked to outstanding sales invoices. The difference to Factoring lies in customer awareness. With a Factoring facility every invoice must have an assignment to the Factor. This is in the form of a stamp telling the customer that the invoice has been assigned to the Factor, and payment must be made to them. Invoice Discounting is confidential so there is no such disclosure. Your business is responsible for ledger management including collections. Instead of supplying copy invoices as would be done with Factoring you supply the Invoice Discounting company with a schedule of invoices raised. Do this in a time scale that suits. Funds are then made available with up to 85% typical. As you are responsible for collections payment will be made to you and it is imperative funds received are banked to the account of the Invoice Discounter (they get very grumpy if this doesn't happen!) It should be a simple facility to operate but it's important you source the right provider. There are variations in security wanted (particularly with Personal Guarantees) and, of course, rates. So it is worth shopping around and an experienced, independent, broker, will help. The facility is available to businesses, minimum turnover around £0.25m with established ledger management systems. The Invoice Discounting company will carry out regular audits of your business to make sure their security - your debtors - is satisfactory.The invoice discounter will be running a copy ledger, albeit based on simple information so they have to make sure their position is not in any way compromised, In an example a printing company with turnover of £7m was looking for extra funding lines to pursue an acquisition policy. At the time the Invoice Discounter became involved the business had an outstanding sales ledger balance of £1.4m. The business had operated on an overdraft of £0.5m, which, after the implementation of an Invoice Discounting line was reduced to £50000. The Invoice Discounter offered a 75% facility, releasing just over £1m. With the increased funding the printer was able to purchase a smaller local printer. Again, and as with Factoring, the extra funds made available could have been equally well spent on stock / raw material purchases, sales initiatives, employee remuneration etc etc     Factoring Partners, P.O. Box 1696, Stratford upon Avon, Warwickshire CV37 0ZZ Tel/Fax: 01789 730137, Mobile 07966 492154 email us