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Invoice discounting is a method of using accounts that the company provides information to the insurance company loans. The loan is generally up to 90% of the value of the invoices that your company has issued.
Invoice discounting is similar to Factoring is another form of invoice finance that ensures money against the value of the invoices. The difference between the two is that Invoice discounting allows you to keep control of your debt management.
When a company uses Factoring services they will usually give control of the management of their debt to the lending company. This means that the lending company will perform billing, credit control and other similar methods.
Invoice discounting gives the company a little more freedom to manage their own affairs in comparison with Factoring.
when should companies use invoice discounting?
If the company needs to improve it is cash and need money quickly, invoice discounting can provide money. One of the benefits of invoice discounting is that the money can reach the borrower often within 24 hours of an agreement is in place with the lender.
Invoice discounting helps build the business by helping her overcome uncertainty when bills will be paid. By creating more regular pattern payment business can then finance it own interest in accordance with the company’s sales.
Companies can only borrow as much as their accounts are worth so Invoice discounting allows them to constructively enhance their level of borrowing their sales growth.
What is Invoice Discounting for?
Invoice discounting is usually only available to companies that have turnover is in excess of £ 100,000. So it’s not ideal for start-ups or very small businesses. A solid business history and good credit ratings often help companies get a secured loan easier.
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