Any business struggling to manage its cashflow should definitely consider invoice finance as a potential solution. It releases the cash tied up in your invoices which are not due for payment for thirty or sixty days. And with late payments continuing to affect small businesses, or even longer.
The two terms Factoring and Invoice Discounting are not interchangeable, though both involve receiving payments more promptly, and more reliably, than you would do otherwise.
Factoring is a disclosed facility which incorporates credit control, debt collection and funding. The person buying your goods and services will be aware that a factor is involved, which might not be what you want. It can also include bad debt protection.
Invoice Discounting is a funding only solution. Usually confidential, it leaves the credit management to you. Like factoring, it can include bad debt protection.
Both products can give you up to 90% of your outstanding invoice value within 24 hours of the work being completed or goods delivered, with the remainder being repaid to you when your customer has paid, minus a charge for the service. This gives you the ability to order more supplies, pay your staff or invest in equipment for your business sooner.
Specific types of invoice finance can be made available for export and import.