Invoice finance solutions
The right facility depends on how you operate
Invoice finance comes in several forms. Some include collections, some are confidential, some let you fund a single invoice. We explain each one and help you compare them on a like-for-like basis.
Facility Types
At a Glance
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.
- Funding grows in line with your sales ledger
- Available as factoring, discounting or selective facilities
- Often used where customers pay on 30 to 90+ day terms
Funding plus collections
Invoice Factoring
Release cash against unpaid invoices while the provider manages credit control and collects payment from your customers.
- Provider typically handles collections and credit control
- Usually disclosed to your customers
- Can suit businesses without a dedicated finance team
Funding, you keep control
Invoice Discounting
Draw funds against your sales ledger while continuing to run your own credit control, often without customers being aware.
- You retain credit control and customer contact
- Can be confidential, subject to provider criteria
- Often suits established firms with sound processes
Fund what you choose
Selective Invoice Finance
Finance individual invoices or specific customers as the need arises, rather than committing your whole sales ledger.
- Choose which invoices to fund
- Typically no long-term whole-ledger commitment
- Useful for occasional or project-based cash-flow gaps
Factoring or Discounting?
The Differences
The two main forms of invoice finance look similar on paper but suit different businesses. Here is how they compare on the points that matter most.
- Who collects payment
- FactoringThe provider's credit control team
- DiscountingYour own team
- Customer awareness
- FactoringUsually disclosed
- DiscountingOften confidential, subject to provider criteria
- Control of customer relationships
- FactoringShared with the provider
- DiscountingRetained by your business
- Demands on your systems
- FactoringLower
- DiscountingHigher: accurate ledger and reporting expected
- Service fee
- FactoringGenerally higher, reflecting the collections service
- DiscountingGenerally lower
- Often suits
- FactoringSmaller or growing firms, lean back offices
- DiscountingEstablished firms with strong processes