Invoice Discounting Explained

You have delivered the goods. You have raised the invoice. Your buyer will pay in ninety days. Invoice discounting turns that ninety day wait into cash now, and the invoice itself is what secures it.

How the facility operates

The sequence is short. You raise an invoice on a buyer who is already part of your facility. You send it to us, usually with the delivery proof behind it. We release a percentage of the invoice value, commonly somewhere in the region of 80 to 90 percent. When your buyer pays on the due date, the advance is settled and the balance, less charges, comes back to you.

Nothing about your commercial relationship has to change. In most structures your buyer carries on paying in the ordinary way, on the ordinary terms.

What is assessed

Assessment weighs the buyer heavily, not the borrower alone.

• Who the buyer is. Their size, their standing, and their own ability to pay.
• How that buyer has paid you before. A buyer who has settled forty invoices at day sixty-five is a very different proposition from one with no history at all.
• Whether the trade is clean. Goods delivered, invoice accepted, nothing in dispute.
• How concentrated you are. One buyer at eighty percent of turnover is a different risk from twelve buyers at eight percent each.

Comparison with a sanctioned limit

A cash credit limit is sized once a year against filed financials. Invoice discounting is sized against the invoices in front of it. If your order book doubles in March, a facility built on invoices can respond in March. A limit set the previous September cannot.

For a business growing faster than its own balance sheet, that is usually the deciding difference.

Where it does not apply

Invoice discounting needs a payable invoice on a known buyer. It is the wrong tool where the sale is on consignment or sale-or-return, because no payment is contractually due on delivery. It struggles where the buyer base is one-off or very scattered, because there is no payment history to read. And a disputed invoice is generally excluded outright, since the dispute rather than the credit is the problem.

If your cash is stuck before the sale rather than after it, what you need is purchase financing, where we pay your supplier so you can buy the stock in the first place.

General information only, not financial advice. Advance rates, charges and structure depend on the final terms of the facility offered and are subject to credit assessment.