What is Invoice Discounting?
If you are a B2B business with a turnover of around £250k or more, invoice discounting could provide you with the steady and reliable cash flow that you’re missing. When you raise a customer invoice, an invoice discounting company will advance you a large proportion of the invoice’s value so you can use the funds almost immediately. However, unlike invoice factoring, you retain control of your sales ledger and are responsible for getting your customers to pay.
Here are the basics…
- You continue to raise and send invoices to your customers as you normally would, but also send a copy to your invoice discounting provider. Nice and simple.
- The invoice discounting provider will pay you a pre-agreed percentage of the invoice amount up front, typically between 70-95%. You’re free to use the funds straight away to reinvest, pay staff, order supplies, pay bills and generally run your business as you want to.
- You’re responsible for getting payment from your customer. Once you’ve received payment you send it to a dedicated account (managed by the invoice discounter)
- Once the invoice discounting company receive the full payment, they will pay you the remaining balance of the invoice amount, minus an agreed fee.
The fees you pay will vary between providers which is why it is important to get at least 3 competitive quotes. They will work out a rate based on your turnover, number and value of invoices. On average fees will fall between 0.5% – 2.5% of your turnover.
How we can help
WhatCost can simplify your decision making process and ensure you receive the best possible service. We have established relationships with the top providers in the UK and can put you in touch with those best suited to your business. They will provide you with full, tailored quotes so you can make an informed decision.
There is no fee for using this service, no obligation to take any of the quotes forwards and no increase in the factoring provider’s fees.
In many cases you will receive better rates than going to the provider directly as they are in active competition with rival companies.
You find the best provider for your business with the best rates, we make a small fee from the provider for finding them a new client and the provider builds a new relationship your business. In short, everyone’s a winner!
BEWARE: It is possible to obtain quotes online via comparison search engines and some provider websites. We advise against this as these quotes tend to be based on automated algorithms that do not take the specifics of your unique business into account. In most cases the initial quote given does not represent all of the fees involved and cannot answer questions about the quality of the service.
If you’d like to get the best deal from the UK’s leading invoice finance providers, please complete the form below and we will contact you within 1 working day.